MNI: ECB Keeps Policy Unch, Say No Discussion On Future Policy

     LONDON (MNI) - The European Central Bank kept its monetary policy stance

unchanged following Thursday's Governing Council meeting, with any decision on

when the asset purchase programme ends pushed back until some time in the

Summer. 

     ECB President Mario Draghi said following the meeting that monetary policy

was not directly discussed at the April meeting "per se", with future policy

definitely not discussed.

     While it was widely expected that the Council will agree on a roadmap for

monetary policy normalisation at its June (or now even July) meeting, Draghi

revealed that the monetary policy outlook was not discussed at today's meeting,

arguing that recent developments must first be digested and assessed by the

Council before moving forward.

     The meeting was underscored by Draghi's confidence in the convergence of

the inflation rate towards the ECB's target and his fairly upbeat reading of

current economic conditions, despite clear signs of moderation across the

currency area.

     "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," Draghi said at the press conference following the

monetary policy meeting.

     Draghi stated that the economic slowdown is likely due to a combination of

normalisation following last year's rapid expansion and temporary factors such

as the weather. However, he also pointed to the fall in backlogs reported in

some confidence surveys as potential signs of softening demand.

     "The risks surrounding the euro area growth outlook remain broadly

balanced. However, risks related to global factors, including the threat of

increased protectionism, have become more prominent," he added.

     Regarding the risk of protectionism impacting the growth outlook, Draghi

also struck a reassuring tone, stressing the fact that the dispute had been

mainly rhetorical and that the effects remained limited. Nevertheless, he

cautioned that the scale of retaliation could be decisive.

     Turning to the inflation outlook, Draghi said that "the underlying strength

of the euro area economy continues to support our confidence that inflation will

converge towards our inflation aim of below, but close to, 2% over the medium

term. At the same time, measures of underlying inflation remain subdued and have

yet to show convincing signs of a sustained upward trend."

     The ECB now expects headline inflation to "hover around 1.5% for the

remainder of the year." Draghi added that, "measures of underlying inflation

remain subdued overall."

     Draghi advocated patience and prudence, "tempered by an unchanged

confidence in the convergence of headline inflation towards the ECB's inflation

target."

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$X$$$,M$$EC$]