Central Banks
ECB Wonders Whether Euro Rally Will Turn From Blessing to Curse
ECB President Christine Lagarde speaks at the ECB Forum in Sintra, Portugal, on June 30.
Source: ECBEuropean Central Bank officials are starting to fret that a rapid appreciation of the euro could derail efforts to anchor inflation at 2%.
The single currency is up about 14% against the dollar this year as confidence in the US dwindles — helping curb price gains that now precisely match the ECB’s goal. The danger, however, is that the rally propels the euro to levels that cause inflation to undershoot the target, damaging competitiveness in the process.