-ECB meeting: status quo on interest rates
Last week, the most important event in the Eurozone was the European Central Bank (ECB) meeting. At this meeting in Frankfurt, ECB president Mario Draghi announced the Bank’s interest rate decision, which was in line with market expectations.
The ECB Governing Council agreed that the interest rate on main refinancing operations, on interest rates on the marginal lending facility, and the deposit facility would remain unchanged at 0.00 percent, 0.25 percent and -0.40 percent, respectively.
The Governing Council expects the key ECB interest rates will remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to 2 percent over the medium term.
Regarding non-standard monetary policy measures, the Governing Council will continue to make net purchases under the asset purchase program (APP) at the current monthly pace of €30 billion until the end of this month.
After September 2018, the Governing Council will reduce the monthly pace of the net asset purchases to €15 billion by the end of December 2018. The Council anticipates that subject to incoming data confirming the medium-term inflation outlook, net purchases will then end.
At the meeting, Draghi stated the “Euro area economic recovery is proceeding along its solid and broad-based path despite prominent uncertainties linked to the global trade.” He highlighted the dangers of protectionist policies, rather than the challenges to emerging markets.
Although the ECB cut its euro-area growth outlook for this year to 2 percent from 2.1 percent, and for next year to 1.8 percent from 1.9 percent, Draghi said, “risks surrounding the euro area growth outlook can still be assessed as broadly balanced”.
-The week ahead
This week, in the Eurozone, inflation data, in particular, will be on the radar of markets. In addition, markets will follow ECB officials' speeches in Berlin, Frankfurt Brussels.