Mario Draghi warns growth in eurozone could slow, after downbeat data

Adjust Comment Print

European Central Bank chief Mario Draghi is expected to play down worries over recent softness in the euro zone economy, even as he keeps option to end lavish bond purchases by the close of the year.

"This moderation may in part reflect a fall back from the high pace of growth observed at the end of past year, while temporary factors may also be at work", said the European Central Bank chief.

The bank's 25-member governing council said Thursday that it was holding its benchmark refinancing rate at a historic low of zero, with analysts not expecting the bank to deliver a fresh rate hike until around the middle of 2019.

"Following several quarters of higher than expected growth, 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", Mr Draghi told reporters in Frankfurt.

"This moderation may in part reflect a pull-back from the high pace of growth observed at the end of past year, while temporary factors may also be at work", he said.

With Thursday's decision, the ECB's bond purchases, aimed at stimulating growth and inflation through rock-bottom debt costs, will continue at 30 billion euros a month at least until the end of September, or beyond if needed to prop up inflation.

RCB banking on 4 straight home games to revive IPL campaign: Woakes
Dhoni slammed seven sixes and a four, while Rayudu blazed eight sixes and three fours respectively. Deepak Chahar to Quinton de Kock: First ball dot as Quinton drives the ball on the off side.

The ECB left all its policy measures unchanged and did not touch the statement as expected.

Business confidence in the 19-country bloc has already taken a knock, most notably in export-focused Germany.

A year ago was the strongest in a decade for economic growth in the euro zone, but a recent slump in investor sentiment since the start of 2018 could threaten the ECB's inflation outlook.

"Over the coming months we'll see a reduction in bond buying and it's likely that interest rates will remain unchanged until the end of the year as Draghi takes the time to wait and see how growth picks up". This, in turn, could have ramifications for the ECB's sole policy objective of ensuring price growth returns to its near 2 percent target. The impact of the euro's strength has been relatively limited so far.

At the time of writing, EUR/USD had fallen to 1.2124 from a pre-meeting level of 1.2175 and the Pound-to-Euro exchange rate had risen to 1.1510 from 1.1480 prior to the meeting.