"After a few quarters of higher-than-expected growth, year-to-date data point to a slowdown, although expansion remains solid." The president of the ECB, Mario Draghi, said it today in the press conference at the end of the Governing Council which he confirmed interest rates in the Eurozone at an all-time low. A level destined to remain unchanged "for a long time to come - reiterated the central banker - and in any case well beyond Quantitative Easing, which will continue at the current rate of 30 billion euros per month until September 2018 and even beyond if necessary".
In any case, “the underlying strength of the economy – added Draghi – continues to convince us that in the medium term inflation will go towards our target, which is lower but close to 2%. However, an ample degree of stimulus remains necessary because inflationary pressures can continue to mount."
TEMPORARY FACTORS WEIGHT
The slowdown in expansion, explained the number one of the ECB, partly reflects a reduction in growth compared to the high levels observed at the end of last year, but it is also linked to "temporary and specific factors for individual countries: low temperatures, the Easter, a series of strikes. But there is also one of the risk factors affecting growth forecasts protectionism".
THE RISK OF PROTECTION IS INCREASING
In particular, as regards the possible increase in tariffs by the USA also towards the EU, “we still have to see what the new rhetoric on protectionism will create: with a tariff increase there could be an immediate effect on trade, but not we know what the scale of reprisals might be. However, we know that these measures have a profound effect on the level of market confidence, which in turn weighs on growth forecasts”.
T-BOND OVER 3%? IT IS A NATURAL DEVELOPMENT OF THE US ECONOMY
Regarding the rise in yields on T-Bonds above 3%, according to Draghi “it was expected, in the light of the conditions of the US economy and the expansive measures still in force. It is therefore a natural development of the American economic situation”.
MORE EFFORTS ARE NEEDED FROM COUNTRIES WITH HIGH DEBT
Finally, the President of the ECB reiterated that “an acceleration of structural reforms in the countries of the euro area also remains necessary. In terms of fiscal policies, in countries where debt is high, efforts need to be stepped up for a correction of the public finances which restores margins of action on the budget. The Governing Council also reiterates its request to complete the banking union”.
