The European Central Bank hosted the monetary policy meeting on Thursday, dropping a long-standing pledge to increase the level of bond purchases it makes in size if needed. The ECB decided to keep interest rates unchanged and to continue its asset purchase program until September. Economists though, hold very different views regarding the future of the ECB’s quantitative easing program.
The ECB said it could still extend its 2.55 trillion euro bond purchase scheme beyond September if needed. Skipping the reference of bigger purchases, indicating that it remains on track to end a three-year stimulus scheme before the end of 2018.
The ECB has risen, its forecasts for real Eurozone’s GDP since its last forecasts in December. The ECB now expects real GDP to hit 2.4% in 2018, 1.9% in 2019 and 1.7% in 2020.
During the press conference, ECB’s President Mario Draghi said the euro zone could even grow faster than now expected, pointing to the biggest risks that are a global trade war and efforts to ease bank regulation, another U.S. policy initiative.
The meeting was seen as a hawkish movement from the central bank and as a result, the euro rose gained strength. Draghi said that the ECB is monitoring the exchange rate "with regard to their possible implications for the inflation outlook." A stronger euro could impact European exports and affect prices in the region. As a result, the bank could be forced to change its monetary policy.
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Daily Analysis - 09/03/2018