NUSA DUA, Indonesia (Reuters) – European Central Bank policy is working as intended and the biggest risks to the policy outlook are a sharp repricing of assets or a sudden rise in interest rates, ECB President Mario Draghi said on Saturday.
He said that specific risks include lingering stability issues in the banking sector or a surprising increase in inflation, which appears unlikely in the euro zone but a more relevant issue in the United States.
On the downside, a risk would be a “snap back” in rates relating to geopolitical issues, such as trade tensions, a renegotiation of EU rules by member nations or infringement on central bank independence by governments, the ECB chief added.
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