Confidence indicators in the euro area show "that the cyclical economic recovery seems to be gaining momentum". This was stated by the president of the ECB, Mario Draghi, in the press conference at the end of the Governing Council, specifying however that a very substantial level of monetary stimulus remains necessary to support a stable normalization of inflation. The central institute, in fact, has left monetary policy unchanged also this month. The ECB president said that the stimulus will continue until December 2017 as planned but also beyond "if necessary". In particular, with regard to the Qe program, Draghi confirmed that from next April its weight will be reduced to 60 billion euros compared to the current 80 billion.
“General inflation rose again – added Draghi – mainly as a result of increases in energy and food, but the pressures on core inflation continue to be subdued”. What has disappeared is the previous "sense of urgency" for any new measures to be taken in the face of deflation risks, which now seem to have vanished, Draghi explained.
Meanwhile, ECB technicians have revised their inflation forecasts for the euro area upwards to 1,7% for this year, 1,6% in 2018 and 1,7% in 2019, provided, of course, that the ongoing stimulus measures continue.
The estimates of real GDP for the euro area for 2017 and 2018 have also been revised upwards, respectively from 1,7% to 1,8% and from 1,6% to 1,7%. On the other hand, the previous forecast of 2019% for 1,6 was confirmed.
“The euro is irrevocable – concluded Draghi – And most of the citizens of the currency area want to keep it”.
After Draghi's statements, the euro-dollar exchange rate is at 1,06018 and the Btp/Bund spread drops to 184 basis points with the yield on the Italian ten-year bond at 2,25%. The Stock Exchanges are also recovering, with Piazza Affari turning positive (+0,6%) driven by bank stocks which regain strength reassured by the number one of the ECB. Fly Ubi Banca, in volatility auction with a theoretical increase of 4,2%. Intesa Sanpaolo (+3,17%), Mediobanca (+3,06%) and Unicredit (+2,26%) also rose sharply.
