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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
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
"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
--MNI London Bureau; tel: +44 203-586-2225; email: firstname.lastname@example.org