The words have changed but the tune remains the same — European Central Bank review

Brittany BishopMar 10, 2017

The European Central Bank left its interest rates unchanged as expected.

In light of the near-doubling in headline inflation in the past few months, the European Central Bank, which is the chief monetary authority for the 19 countries that use the euro currency, sharply raised its inflation projection for this year, to 1.7 percent from 1.3 percent previously.

The draft communique, which is dated March 1 and may still change, drops pledges to "resist all forms of protectionism", "refrain from competitive devaluations" and not to "target our exchange rates for competitive purposes".

ECB President Mario Draghi, who will attend the meeting, said free trade and free-floating currencies brought economic stability and prosperity and batted back US accusations that Germany was exploiting a weak euro to gain a trade advantage. Forthcoming elections in some of the bloc's biggest economies, including France, Germany and the Netherlands, are also clouding the outlook.

What's more, "we haven't yet seen a significant economic impact" from political upheavals over the past year, Draghi said, including Britain's vote last June to quit the European Union and the USA election of President Donald Trump.

The bank is now committed to continuing its bond-buying programme until at least December, although the €80bn-a-month quantitative easing (QE) scheme will be trimmed to €60bn a month from April.

But the Munich-based Ifo economic research institute insisted Thursday a change of policy was overdue.

But at best the central bank may bump up some economic forecasts, particularly for inflation.

And that leaves President Mario Draghi with the job of explaining at his post-decision news conference why he is pressing on with the stimulus when the economy is growing and inflation has reached the bank's goal of just under 2 percent.

Draghi also said incoming data increase confidence that the economic expansion will continue "to firm and broaden".

The President of the ECB, Mario Draghi, acknowledged today that short-term German government debt is out of sync with fundamentals, with two-year issues still trading at close to all-time-low negative yields.

The ECB is expected to maintain dovish with its interest rates. The main lending rate stands at 0% and the deposit rate at -0.40%.

Draghi has pushed back against critics so far with the backing of an apparent majority on the bank's 25-member governing council.

Related Articles:

Next article »

Popular Pages

97-year-old twins freeze to death after falling outside
Police recovered the bodies of Jean Haley and Martha Williams on the property of 21 Opechee Drive at about 8:11 a.m. on Saturday. Cops think Jean may have then tripped on a rug on the garage floor as she went inside to call for help.

Bills will keep Tyrod Taylor after restructure
There was uncertainty about what might happen with Taylor , as the Bills had an option on the quarterback for the 2017 season. There had been speculation that the Bills would release Taylor, but they now appear to be committed to the six-year veteran.

TSA unveiling 'more thorough' pat-down process
Stratte-McClure said TSA agents told the waiting passengers: "You're not going to like the new pat-down regulations". Christina Lindstrom tells us her pat-down was not out of bounds; but if it had been, she would have left.

Steven Spielberg to direct Tom Hanks and Meryl Streep in The Post
Steven will direct from a script written by Liz Hannah and also serve as producer. Streep, coming off an Oscar nom for Florence Foster Jenkins , would play Graham.

China to increase military spending by 7% in 2017
Yesterday's announcement came just days after US President Donald Trump said he would boost defence spending by about 10 per cent. An American aircraft carrier, the USS Carl Vinson, has been patrolling in the South China Sea for much of the past two weeks.

Poachers kill rhino in French zoo
Thoiry Zoo, about 50 kilometers (30 miles) west of Paris, features a safari park that visitors can only access in a vehicle. The rhino, named Vince, was shot dead at Thoiry Zoo before the poachers sawed off one of those horns , according to CNN .

Logan scores record opening weekend box office
Logan has been Xavier's caregiver for years in the wake of the death of the X-Men and slow extinction of all mutants in the world. Hugh Jackman is certainly ageing like wine as he has carried the baton in style and has given a powerful performance.

Most Americans want a special prosecutor to probe Team Trump's Russian Federation ties
Last month then-National Security Advisor Michael Flynn was forced to resign over a phone call with Kislyak. President met with Russia's ambassador to the U.S. last April in the midst of his election campaign.

Syrian Govt, Rebels Agree on Agenda for Future Peace Talks
The Russian military says its officers have planned and directed the Syrian operation to recapture Palmyra. Rudskoi said over 1,000 IS militants were killed in the fight for Palmyra.

GST Council passes crucial Central GST, Integrated GST laws
The government is now poised to implement GST from July 1 provided it got necessary approval from Parliament, he said. Subsequently, the bills will be tabled together in Parliament in the second half of the budget session.