Everything as expected. The Governing Council of the European Central Bank has again decided to don't touch interest rates, which therefore remain at their current level: the principal remains anchored at 0%, the rate on marginal loans settles at 0,25%, while that on deposits is -0.40%.
The rates are expected to stay that way for a long time and “well beyond the horizon of net asset purchases,” ie quantitative easing. Not only that, during the usual monthly press conference, the president of the ECB Mario Draghi underlined that "rates will hardly be raised within the year".
Speaking precisely of monetary policy, the ECB confirms the will to extend its duration "until September 2018 and even beyond if necessary". According to what was declared, the program will continue "until the management sees a lasting adjustment in the trend of inflation in line with its objective (achieving 2% ed.)"
In the note released by the Eurotower, the institution led by Draghi underlines that, in the event that the growth prospects become less favorable or the financial situation is inconsistent with the pre-established progress, the Governing Council is ready to boost the asset purchase program (APP) in terms of size and/or duration. The Eurosystem will also reinvest the principal payments from maturing securities for an extended period of time after the end of the net asset purchases and in any case for as long as necessary. 'This will contribute – it is explained – both to favorable liquidity conditions and to an adequate monetary policy stance.'
"GDP grew by 0,7% in the third quarter of 2017” – said Draghi – “Corporate investment continues to strengthen, household investment has improved and the economic expansion is supporting exports. Looking ahead, the risks to the eurozone's growth prospects are balanced.
According to the number one of the ECB, therefore, everything is proceeding as planned, but risk factors still persist linked to "global factors" such as 'the strengthening of the euro can be a source of uncertainty that needs to be monitored." Mainly due to the parallel weakening of the greenback, lthe single currency has in fact risen above 1,25 against the dollar right during the press conference, hitting a three-year high. In detail, the EUR/USD exchange rate settled at 1,2526 after a high at 1,2538. Since the beginning of the year, the appreciation of the community currency against the US currency is 4,5%. "The recent volatility in exchange rates - explained Draghi - represents a source of uncertainty that requires attention regarding the possible implications on price stability in the medium term".
Not only that, after the words of the US Treasury Secretary, Stephen Mnuchin on exchange rates and protectionism, the ECB president does not hide the concern of the Council: "This concern went beyond the simple exchange rate and concerned the general state of international relations in this moment. If this were to lead to an unjustified and unjustified monetary policy tightening, then we would have to rethink our strategy.
Returning to the growth of the Eurozone, Draghi confirmed its "robustness", also indicating an acceleration at the beginning of the year.
On the chapter consumer prices: "Inflation remains subdued and should remain at current levels," said the Italian banker, adding that core inflation should "gradually increase over the medium term." The robust pace of expansion of the economy and the transmission of monetary policy lead to a "growing confidence" that inflation will converge towards the long-term objective. In other words, inflation will approach but remain below 2%.
