Italy and the recent elections to the Governing Council of the ECB were not discussed, "we were very focused on monetary issues". However, “in general, fiscal sustainability is among the highest concerns in high-debt countries”. This was stated by the president of the ECB, Mario Draghi, in the press conference at the end of the Governing Council meeting on Thursday morning.
As for the comparison of the trade war that risks opening with the US, Draghi stressed that "growing protectionism is among the risks on a global scale that threaten to curb economic growth" and that "unilateral decisions are dangerous. Trade disputes should be discussed and settled in multilateral fora. If you impose tariffs on your allies, then who are your enemies?” Draghi said again, adding that this type of measure can weaken the climate of confidence.
WAITING FOR TRUMP'S ANNOUNCEMENT
Today, at 21 pm Italian time, the announcement of the US president, Donald Trump, is expected on the duties to be imposed on steel and aluminum imports. Meanwhile, Trump tweeted this morning: “Looking forward to today's 30:15,30 pm meeting at the White House. We must protect and build up our steel and aluminum industries, while showing great flexibility and cooperation with those who are true friends and treat us fairly both commercially and militarily."
Details are still missing, but it is possible that Canada, Mexico and other countries could avoid the tariffs. According to rumors in the US press, Trump should offer Canada and Mexico a 30-day exemption, to be extended based on progress on the reform of NAFTA, the free trade agreement in North America.
EUROZONE GDP GROWS MORE THAN EXPECTED
Returning to Draghi, with reference to the economic situation, the number one of the ECB said that "the latest information confirms a strong and broad-based impetus in the euro area economy, which is now expected to expand more than previously estimated" .
The Eurotower has revised positively the forecast on the 2018 GDP trend of the Eurozone, bringing it to +2,4% from the +2,3% estimated in December. Instead, the expectations for 2019 (+1,9%) and for 2020 (+1,7%) were confirmed.
QE: ECB NO LONGER TALK ABOUT THE POSSIBILITY OF INCREASING IT
On the monetary policy front, the ECB left interest rates unchanged as expected and confirmed its guidance for the coming months. The Governing Council, announces the ECB, expects the reference interest rates to remain "at current levels for an extended period of time and well beyond the horizon of net asset purchases".
Also confirmed the trajectory of asset purchases, which will continue at the pace of €30 billion per month “until the end of September 2018, or even beyond if necessary, and in any case until the Governing Council finds a lasting adjustment in the evolution prices consistent with its inflation target.
However, in the final communiqué, the Governing Council deleted the reference to the possibility of increasing the asset purchase program in terms of size and/or duration should financial conditions become less favourable. It is the first step of the exit strategy.
“It is mainly a contextual decision – Draghi said – we have removed the explicit reference to an increase in Qe in the light of a worsening of the situation that the ECB does not foresee today. I recall that the phrase in question was introduced in 2016, when we cut the QE volume from 80 billion euros a month to 60 billion euros a month and it was obviously a very different situation from the current one. The decision was unanimous."
Yet, at the same time the ECB has revised downwards its inflation forecasts for the euro area for next year. Now on 2018 he estimates a +1,4% growth in consumer prices, the same level expected for 2019, while in 2020 it should rise to +1,7%. Three months ago, however, the technicians of the ECB forecast a +1,5% on 2019.
