AFP, Frankfurt :
With clouds gathering over the outlook for economic growth and inflation limping, European Central Bank President Mario Draghi will likely temper expectations Thursday for a quick exit from its massive stimulus programme for the eurozone, analysts say.
Governors are expected to keep interest rates at their historic lows and hew to a September expiry date for their 30-billion-euro ($37 billion) per month “quantitative easing” (QE) bond-buying scheme.
Caution from Frankfurt is even more likely as policymakers dropped a promise that they could increase QE if the economy weakened again at their last meeting in early March, saying they had been encouraged by positive data.
“Draghi will have to strike a balance between recognising that economic data suggest the beginning of a slowdown, while saying (the ECB’s) March scenario of greater confidence it can bring inflation back towards its objective remains intact,” said Bank of America Merrill Lynch economist Gilles Moec.
Since late last year, the euro has strengthened against the dollar as the economy gathers pace and financial markets anticipate future interest rate rises, potentially slowing growth and inflation in the eurozone.
The ECB’s central price stability objective is inflation of just below 2.0 percent.
But price growth stood at 1.3 percent in March, and central bank forecasts call for it to reach just 1.7 percent by 2020.
Meanwhile, President Donald Trump’s strident “America First” policy has shaken companies and markets worldwide in recent weeks, as he vowed to slap tariffs on metals imports.
With clouds gathering over the outlook for economic growth and inflation limping, European Central Bank President Mario Draghi will likely temper expectations Thursday for a quick exit from its massive stimulus programme for the eurozone, analysts say.
Governors are expected to keep interest rates at their historic lows and hew to a September expiry date for their 30-billion-euro ($37 billion) per month “quantitative easing” (QE) bond-buying scheme.
Caution from Frankfurt is even more likely as policymakers dropped a promise that they could increase QE if the economy weakened again at their last meeting in early March, saying they had been encouraged by positive data.
“Draghi will have to strike a balance between recognising that economic data suggest the beginning of a slowdown, while saying (the ECB’s) March scenario of greater confidence it can bring inflation back towards its objective remains intact,” said Bank of America Merrill Lynch economist Gilles Moec.
Since late last year, the euro has strengthened against the dollar as the economy gathers pace and financial markets anticipate future interest rate rises, potentially slowing growth and inflation in the eurozone.
The ECB’s central price stability objective is inflation of just below 2.0 percent.
But price growth stood at 1.3 percent in March, and central bank forecasts call for it to reach just 1.7 percent by 2020.
Meanwhile, President Donald Trump’s strident “America First” policy has shaken companies and markets worldwide in recent weeks, as he vowed to slap tariffs on metals imports.
