Mario Draghi, European Central Bank president, acknowledged a “moderation” in the pace of the Eurozone recovery but signaled no change in monetary policy.
The ECB confirmed expectations by leaving policy unchanged earlier on Thursday, keeping to its commitment to bond-buying at a monthly 30 billion euros (USD 37 billion) until at least September.
The central bank’s quest to restore sustainable inflation of just under 2% has been complicated by data suggesting that the euro area’s strongest growth in a decade may be faltering. As well as waning industrial output and deteriorating business confidence, the threat of a global trade war is hanging over Europe’s export-oriented economy.
In his opening statement, Draghi repeated a pledge to monitor exchange rate developments and their potential impact on inflation.
“Incoming information since our meeting in early March points towards some moderation while remaining consistent with a solid and broad-based expansion of the euro-area economy,” Draghi said. “The underlying strength of the euro area economy continues to support our confidence that inflation will converge towards our inflation aim of below, but close to, 2 percent over the medium term.”
“Mario Draghi’s remarks suggest the European Central Bank is comfortable with the outlook for growth while acknowledging that a little momentum has been lost. So far, what’s been said is consistent with our view that asset purchases will come to an end this year.”
Policy makers had already signaled that they expected growth to stabilize at a solid pace. An initial look at the euro-area gross domestic product in the first quarter will come next Wednesday, with economists predicting growth of 0.5 % weaker than the 0.7% recorded at the end of 2017, but still pointing to above-potential expansion.
Draghi reaffirmed his confidence that inflation will eventually rise to the ECB’s goal of just under 2%, even if there are still “no convincing signs of a sustained upward trend.” While wages may be finally headed higher, consumer-price growth was unexpectedly revised down to 1.3% in March from an initial estimate of 1.4%.
The euro continued to drop on Friday to 1.2070. It was up about 0.2% before the ECB’s announcement and at the start of Draghi’s remarks.