The Central Bank'S Relaxation Of Monetary Policy To Stimulate The Flagging Economy Remains To Be Seen.

According to 3 sources from the ECB, the ECB does not like the recent decline in the US dollar, but accepts that this is the natural result of the cautious economic outlook of the Fed, and sees no reason to act to weaken the euro.

The dollar's weakness is reducing imported inflation in the euro area, making it harder for the European Central Bank to boost prices. Since the beginning of March, the euro has depreciated by 4% against the US dollar, and has depreciated by 6% in the past year.

But the 1 place. Europe Central bank officials said anonymously that as many major central banks relaxed monetary policy In a stimulating economy, policymakers are likely to get into costly monetary battles.

"We must admit that the exchange rate channel is no longer as effective as it used to be," said an insider from the European Central Bank who asked for anonymity. After the US Federal Reserve lowered its interest rate path, the US dollar fell, so we even need to avoid giving people the impression that we aim at exchange rate.

The source said, "a strong euro is not conducive to inflation, but it is still in a fully acceptable range, and oil prices are finally beginning to benefit us."

The US dollar closed against the yen for the 17 month low. Last month, the US dollar was hit. Federal Reserve Policymakers hinted that they only raised interest rates 2 times this year instead of the 4 expected in December last year.

Japan's finance ministry official said the market misunderstood the meaning of the February G20 Shanghai conference communiqu. The communique promised to avoid currency devaluation, but did not prohibit monetary policy measures that could indirectly lead to exchange rate fluctuations.

Another European Central Bank source said, "of course, I am a little annoyed about the trend of exchange rate, but we must deal with it. The G20 announcement has a principled agreement on exchange rate, but the risk of "Britain's retreat from Europe" and the adjustment of the Fed's position have led to a substantial fluctuation in the exchange rate.

The source added, "but the Fed is clearly making policies that are conducive to the US economy, but there is no sign that their aim is to devalue the currency."

Last Friday (April 15th), Roubini, an American economist, suggested that the European Central Bank was angry at the Fed's view of lowering the dollar and hoped to push forward the exchange rate agreement at the G20 conference this week in Washington.

But conversations between central bankers and government officials suggest there is no such tension.