European Central Bank Faces Hurdle in Cutting Stimulus: A Weak Dollar<br />So while analysts had predicted that a decision to “taper” stimulus would be announced at the meeting of the central bank’s Governing Council on Thursday, they now think<br />that Mario Draghi, the central bank’s president, will wait until late October at the earliest.<br />There’s not much Mr. Draghi can do about the weak dollar, which analysts say reflects pessimism about the ability of President Trump and Congress to agree on legislation<br />that many economists believe would help goose growth in the United States, such as infrastructure programs or corporate tax reform.<br />Mr. Draghi could express concern about currency rates when he holds a news conference Thursday, the kind of statement<br />that would be seen by analysts and traders as an implied threat to pursue policies that would weaken the euro, for example by extending the stimulus measures.<br />For one, when the euro rises against the dollar, European exports become more expensive — not only in the United States<br />but also in other countries, like China, whose currencies are linked with the dollar.<br />A robust euro also undercuts the bank’s efforts to jolt inflation back to the official target of 2 percent, a level considered healthy for growth.<br />Since early 2015, the European Central Bank has been flooding the 19-nation eurozone with cash to lower interest rates, stimulate growth<br />and raise inflation from levels considered to be dangerously low.
