The ECB raised its economic growth forecast from 1.9 percent to 2.2 percent, nearly reaching levels of growth witnessed prior to the financial crisis. ‘We think we are going to be ready for much of what we have to decide in October. if not then we postpone’.
“There’s no question that the European Central Bank is anxious about the euro’s appreciation but there’s little [Draghi] can actually do about it”, says Aberdeen Standard Investments senior investment manager Patrick O’Donnell.
The ECB is now buying 60 billion euros ($72 billion) per month of government and corporate bond purchases as part of its efforts to push up growth and inflation.
Yet he reinforced the US central bank’s general expectation that an inflation rebound is around the corner, allowing it to continue tightening monetary policy before too long.
The central bank’s economists are also expected to raise their growth forecasts for 2017 and if they do, it will be the third forecasting round in which their growth projections.
But analysts expect this to be scaled back in the months ahead given the eurozone’s recovery. As a result, the Euro remains desirable to investors on the foreign exchange markets, in anticipation of a reduction in stimulus in the near future due to strong growth in the first half of the year and a pick-up in inflation. By October the German elections will be out of the way, the Federal Reserve will have met and there will also be another month of economic data to support a decision.
Emphasis on “or beyond” and the references to “inflation” – the key variable that the euro’s strength had been exerting downward pressure on.
British-born Mr Cryan told a banking conference in Frankfurt: “The era of cheap money in Europe should come to an end – despite the strong euro”.
The programme has been credited with turning around the euro area’s growth prospects and staving off the treat of deflation.
The slow pick-up in consumer-price growth may give officials reason to wait longer.
The New Zealand climbed 1.1 per cent to $0.7305, on the dollar weakness and a rise in the country’s second quarter manufacturing sales as well as higher volumes for dairy and meat products.
Governors kept the bank’s main refinancing rate at 0 per cent, the marginal lending rate at 0.25 per cent, and the deposit facility rate at -0.4 per cent, meaning banks have to pay to park their cash with the ECB, a spokesman said. Negative rates are meant to encourage banks to lend money to businesses rather than holding it themselves or, as is the case with the deposit facility rate, depositing it with the ECB overnight.
The ECB said it still expected rates to “remain at their present levels for an extended period of time”.