European Central Bank (ECB) chief Mario Draghi warned on Thursday that the surge in the euro was a source of uncertainty and said the bank might have to review strategy if United States comments on a weak dollar lead to a change in monetary conditions.
The Eurozone countries enjoy the strongest economic growth in a decade.
Following recent US Dollar weakness on the back of the White House's rumoured plans to ramp up protectionist trade policies, investors were shocked to hear that Mnuchin was welcoming the recent US Dollar losses.
Economists surveyed by Bloomberg don't expect policy makers to start making changes to their guidance until March, with an end-date for asset purchases announced by June. Looking at past year, the European Central Bank managed to increase the forecasts for 2018 to 2.3% from the latter 1.8%.
The euro's ascent to a three-year high against the dollar may yet become a thorn in the economy's side if it curbs exports and damps prices.
"Several (ECB Governing Council) members expressed concern, and this concern was in a sense broader than simply the exchange rate, it was about the overall status of worldwide relations right now..."
COMMODITIES: Oil prices shot through the roof yesterday, and moved even higher today, with WTI and Brent crude trading 0.8% and 0.5% higher respectively during the Asian trading session Thursday, reaching fresh multi-year highs. Purchasing managers' indexes released for January already suggest that momentum accelerated into this year.
The bank says it'll keep buying 30 billion euros ($36 billion) per month in bonds at least through September.
The Dow Jones Industrial Average .DJI rose 140.67 points, or 0.54 percent, to end at 26,392.79, the S&P 500 .SPX gained 1.71 points, or 0.06 percent, to 2,839.25 and the Nasdaq Composite .IXIC dropped 3.90 points, or 0.05 percent, to 7,411.16. The advance came after the weekly EIA inventory data showed a drawdown in USA crude stockpiles for the tenth straight week.
He said "that an ample degree of accommodation is necessary to help price pressures build up" adding that "there are very few chances that interest rates would be raised this year".
Part of his holding pattern approach, Draghi also kept the bank's guidance unchanged, maintaining a promise to continue asset buys until a sustained rebound in inflation, even after policymakers agreed in December to begin work in early 2018 to draft a new guidance. "We look at inflation, that is our main concern".
The euro's rise continued despite Mr Draghi's insistence that the European Central Bank would consider loosening its monetary policy should a weak dollar lead to an "unwarranted" rise in the cost of money in Europe.
The uncertainty comes as the economic recovery "strengthen [s] further" the ECB's confidence that inflation "will converge towards our inflation aim of below, but close to, two percent".