June 18, 2019 / 11:19 AM / 4 months ago

Trump blasts comments by ECB's Draghi, cites unfair competition

WASHINGTON (Reuters) - U.S. President Donald Trump criticized European Central Bank President Mario Draghi’s comments earlier on Tuesday that further monetary policy changes may be needed by the ECB, saying that would spark unfair European competition against the United States.

FILE PHOTO: European Central Bank (ECB) President Mario Draghi speaks in Frankfurt, Germany, November 16, 2018. REUTERS/Ralph Orlowski/File Photo

“Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others,” Trump said on Twitter.

Draghi said the ECB might may need to cut interest rates or purchase assets if inflation in the euro zone continued to lag its target range.

“In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required,” Draghi told the ECB’s annual conference in Sintra, Portugal.

The comments sent the euro down by a quarter of a percent against the U.S. dollar while stocks erased early losses and bond yields fell further.

Trump has repeatedly criticized currency manipulation by other countries with which the United States has large trade deficits, saying weaker currencies abroad give trading partners an unfair advantage and hurts American workers.

If a country’s currency is artificially low, its exports are more competitive. Higher U.S. interest rates would generally increase the value of the dollar, making U.S. exports more expensive.

Earlier in June, Trump criticized China, with which he is engaged in a trade spat, for devaluing its currency and said it created an uneven playing field for commerce.

He made similar criticisms of Russia and China in April, remarks that Treasury Secretary Steve Mnuchin said were “a warning shot at China and Russia about devaluation.”

Trump has been critical of the U.S. Federal Reserve for its recent interest rate increases and has pressed the independent central bank to cut rates at a policy meeting this week. But the Fed is expected to leave borrowing costs unchanged on Wednesday.

Reporting by Susan Heavey and David Alexander; Editing by Bernadette Baum

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