Published: Fri, April 27, 2018
Finance | By Cynthia Curry

ECB Chief Optimistic On Eurozone Growth Despite Softer Economy

ECB Chief Optimistic On Eurozone Growth Despite Softer Economy

Draghi dismissed the slow-down as of little outcome to the broader themes of regional growth and convergence with more normal levels of inflation in the medium-term - at or just below the ECB's target of 2.0%.

In the press conference Mario Draghi announced the governing council's message was for "caution tempered by an unchanged confidence that inflation will converge to our inflation target over the medium-term but that confidence is conditional on an accommodative monetary policy framework being in place".

The strength of the Euro was not a pressing matter for policy-setters either, and Draghi dismissed the impact of protectionism as so far not material enough to cause concern.

European Central Bank chief Mario Draghi is expected to play down worries over recent softness in the euro zone economy, even as he keeps option to end lavish bond purchases by the close of the year.

Previous year was the strongest in a decade for economic growth in the euro zone, but a recent slump in investor sentiment since the start of 2018 could threaten the ECB's inflation outlook.

The timing of when the ECB will end its stimulus program is crucial because it gives investors a major clue about when the central bank could then look to raise interest rate benchmarks.

IOS 11.3.1 rolls out with iPhone display fix
A particular bug was causing some iPhone 8 models fitted with third-party display units to become unresponsive to touch. The iOS 11 .3.1 update is available for download on all iPhones, iPads and iPods running iOS 11.

Business sentiment has already taken a hit, particularly in export-focused Germany, and a full-fledged trade war could quickly hurt growth - a risk already highlighted by policymakers at the ECB's March meeting.

With Thursday's decision, the ECB's bond purchases, aimed at stimulating growth and inflation through rock-bottom debt costs, will continue at 30 billion euros a month at least until the end of September, or beyond if needed to prop up inflation.

Interest rates will be on hold until well past the horizon of net asset purchases, which likely implies a hike in September 2019 at the earliest, the economist added.

At the European Central Bank governing council meeting, it was decided that the Eurozone base interest rate will remain at 0.00 percent, with the marginal lending rate and deposit rate remaining at 0.25 percent and minus 0.40 percent respectively.

The single-currency rose marginally during the event, ending the press conference higher, in line with most analysts pre-meeting slightly bullish Euro estimates, however, later traders sold the Euro as faith evaporated.

A key worry is that protectionist rhetoric from the United States could push down the value of the dollar even as the Federal Reserve is likely to raise interest rates several times this year, to support the U.S. currency. The marginal lending facility rate is 0.25 percent.

Like this: