How Mario Draghi Could Explain Eurozone Economy's Apparent Slowdown

Apr 28, 2018, 15:21
How Mario Draghi Could Explain Eurozone Economy's Apparent Slowdown

Draghi told his press conference that while the economic effects of the current tensions so far did not appear to be substantial, it remained unclear what might be the fallout from any retaliation sparked by the US' protectionist stance.

Trump is widely expected to end a temporary exemption for European steel and aluminum imports from new tariffs imposed by the U.S. two months ago, which runs out on May 1.

"Following several quarters of higher than expected growth, incoming information since our meeting in early March points towards some moderation while remaining consistent with a solid and broad-based expansion of the euro area economy", he told reporters in Frankfurt.

Mr Draghi, the president, said that the inflation rate would "hover..." "It's quite clear that since our last meeting, broadly all countries experienced, in a different extent of course, some moderation in growth or some loss of momentum".

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.

"Despite emphasising downside risks more than before, the ECB tried to not sound overly concerned", said economist Holger Schmieding of Berenberg bank.

After a strong rally into February, the euro has since been stuck in a trading range against the dollar as investors pared back expectations of an European Central Bank moving rapidly towards the end of its monetary stimulus programme. A spokesman for the Austrian central bank wasn't immediately available for comment.

That didn't stop him from hammering home governors' "unchanged confidence" that they would hit the target, pointing to "certain encouraging signs" that wages were beginning to increase - potentially boosting prices in turn.

Draghi holds a news conference Thursday after a meeting of the bank's 25-member rate-setting committee. But recent economic data has been mixed.

Even so, it remains unclear whether the European Central Bank could announce a move to wind down QE in June or leave a decision to July, how long it will stretch out the exit for and how much flexibility it will build into its plans, Brzeski added.