European Central Bank President Mario Draghi said Friday the global recovery is improving, but like an increasing number of financial and business leaders, warned about demographic challenges to growth.
The euro spiked 1 percent to a high of $1.1940, its highest against the U.S. dollar since January 2015 after Draghi's initial remarks.
"The global recovery is firming up," Draghi said, according to prepared remarks on the European Central Bank website. He noted that in Europe and Japan, "the consolidation of the recovery is at an earlier stage" versus that of the U.S.
Draghi also said significant monetary accommodation is still needed and that inflation is not yet converging to the central bank's target. The euro edged off session highs to trade near $1.192 after those comments.
"It would suggest that nothing is imminently forthcoming from Frankfurt," said John Velis, vice president of Global Macro Strategy at State Street Global Markets.
"Of course, what's missing, and what he has mentioned in the past, is that the strength of the currency has served as a break on demand and inflation in the euro zone," Velis said. "Markets got the hint however, and the impressive spike in EUR immediately after his prepared remarks has now been blunted."
Draghi was speaking at the annual central bankers' meeting in Jackson Hole, Wyoming. His prepared remarks did not comment directly on future ECB monetary policy.
The ECB president also said Friday that the central problem of "how to raise potential output growth" faced increasing challenges.
"Without stronger potential growth, the cyclical recovery we are now seeing globally will ultimately converge downwards to those slower growth rates," Draghi said. "Slower growth will in turn make it harder to work through the debt and demographic challenges facing many advanced economies."
Ahead of the speech, some speculated Draghi might use Jackson Hole to hint at when the ECB might begin tightening monetary policy by cutting back on its asset purchase program. But in a Wednesday speech in Germany, Draghi did not comment on how the central bank might adjust policy to the improving economy in the euro zone.
On Friday, Germany's Ifo economic institute said its business climate index edged down to 115.9 from 116.0 in July, versus the consensus Reuters estimate for 115.5.
The euro had already begun strengthening against the U.S. dollar earlier in the day after Federal Reserve Chair Janet Yellen did not address future monetary policy in a Friday speech. Yellen said the financial system is safer now than it was at the time of the financial crisis about a decade ago and did note regulations may need some adjustments.
WATCH: Euro spikes on Draghi comments
