Mario Draghi, head of the European Central Bank, had some stern words for President Donald Trump just hours after the U.S. commander in chief accused him of unfairly targeting the euro's exchange rate.
"We have our remit, we have our mandate," Draghi told an audience at the ECB's annual forum in Sintra, Portugal, on Tuesday.
"Our mandate is price stability defined as a rate of inflation which is close to but below 2% over the medium term."
He iterated that the euro zone's central bank is "ready to use all the instruments that are necessary to fulfill this mandate." "And we don't target the exchange rate," he said to applause from the crowd.
Trump went after Draghi early Tuesday for opening the door to more monetary stimulus in Europe, which would likely weaken the common currency against the greenback.
"They have been getting away with this for years, along with China and others," Trump said in a tweet, noting a weaker euro would make it "unfairly easier for them to compete against the USA."
Trump later also highlighted gains in the German DAX stock market, attributing the move to Draghi's comments. "Very unfair to the United States," he said.
Draghi effectively paved the way for more stimulus on Tuesday morning, saying the bank could cut interest rates again or provide further asset purchases if inflation doesn't reach its target.
The euro dropped 0.2% against the dollar in a matter of minutes as Draghi delivered the remarks. The German 10-year bund yield hit -0.30% for the first time ever and the U.S. 10-year Treasury yield hit its lowest since September 2017 at 2.0475%.
This renewed dovish tone from Draghi comes after years of ultra-low interest rates in the euro zone after the sovereign debt crisis of 2011. The ECB has also provided purchases of corporate and government bonds, and cheaper loans to banks.
Other names in finance tried to defend Draghi on Tuesday and stated that the ECB will always be an independent institution. Mar Gudmundsson, governor of the central bank of Iceland, told CNBC that if the ECB thinks it needs further stimulus then it's because it wants to get inflation higher.
"It doesn't necessarily mean that the real exchange rate of the euro will depreciate that much, at least not in the long run. This has varied from time to time, sometimes the U.S. dollar has been strong against the euro and sometimes it has been the reverse. There is nothing wrong with that," he told CNBC's Annette Weisbach.
— CNBC's Fred Imbert and Silvia Amaro contributed to this article.