ECB's Draghi says growth has moderated, outlook solid

ECB's Draghi says growth has moderated, outlook solid

Draghi reaffirmed his confidence that inflation will eventually rise to the ECB's goal of just under 2 percent, even if there are still "no convincing signs of a sustained upward trend".

But he said "careful assessment, monitoring. more information" were needed before deciding how the European Central Bank should respond, arguing that the data for now remain "consistent with a solid and broad-based expansion".

"This moderation may in part reflect a pull-back from the high pace of growth observed at the end of past year, while temporary factors may also be at work", he said. Initially, the ECB President said that the recent economic deceleration in the economy should also be seen against the background of the very dynamic development in the earlier quarters.

The market is expecting no change however President of the European Central Bank Mario Draghi's press conference shortly after could have an immediate impact on euro exchange rates.

Analysts at TD Securities meanwhile say their base-case scenario for the meeting is for Draghi to largely dismiss the current slowdown in growth as temporary and to focus on a more positive medium-term outlook, in which the forecast for inflation would, most significantly, remain unchanged.

The ECB Governing Council meeting scheduled for this Thursday is likely to turn to be a yawning experience for both participating policymakers as well as the market player.The Eurozone inflation accelerated in March to 1.3 percent over the year, up from 1.1 percent in February, but the core inflation remained subdued at 1.1 percent over the year in March.

Trump not expected in Ireland during United Kingdom visit in July
British opponents of Donald Trump looking forward to shouting at the USA president in person this summer could be disappointed. Protesters have already vowed they will be out in force to let the US President know what they think of him.

Mike Pompeo confirmed as secretary of state
Democrats have accused Pompeo of being too hawkish and they anxious about previous harsh statements he has made about Islam. However, the new secretary of state is considered a foreign policy hawk, especially on the issue of Iran nuclear deal .

Republicans wants answers from EPA chief
But that doesn't mean the research is invalid - at least, not to legitimate scientists. Last week, 107 United States lawmakers signed a resolution urging Pruitt to resign.

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

Business confidence in the 19-country bloc has already taken a knock, most notably in export-focused Germany.

Economists polled by Reuters ahead of the meeting expected bond purchases to end this year after a short taper and to see the first rate increase in the second quarter of 2019. It is up around 1.5 percent against the USA dollar so far this year and was trading at $1.2155 shortly after 1 p.m. London time.

The greenback declined 0.1 percent to 109.31 against the safe-haven currency yen, after hitting a 2-1/2-month high of 109.49.

A stronger euro would cap inflation, a headache for the European Central Bank.

A stronger euro would cap inflation, a headache for the ECB as price growth is already set to miss its near 2%target, the central bank's sole policy objective, for years more to come. Some, however, have started to flag risks of a delay. As US interest rates rise while traders question the ECB's resolve to tighten monetary policy, the euro is becoming relatively less attractive as an investment destination.

Related Articles