European Central Bank lifts its growth forecasts marginally higher
The European Central Bank (ECB) yesterday nudged up its expectations for growth and inflation in the euro area this year, but kept its main interest rate unchanged in negative territory and said it would press on with its unprecedented stimulus effort.
Speaking after a meeting of the bank's governing council in Vienna, ECB President Mario Draghi said he expected rates to stay at present or lower levels well beyond the duration of asset purchases, which are due to last till at least March 2017.
"Economic recovery in the euro area continues to be dampened by subdued growth prospects in emerging markets, the necessary balance sheet adjustments... and a sluggish pace of implementation of structural reforms," he told reporters.
He said additional stimulus "is expected from the monetary policy measures still to be implemented and will contribute to further rebalancing the risk to the outlook for growth".
Inflation has missed the ECB's target of nearly 2pc for years as high unemployment keeps a lid on wages, high debt levels choke investment, demand for goods and services remains weak and sharply lower oil prices drag down prices.
But with first quarter growth beating all expectations, economic sentiment rising, investments recording a surprising surge and household consumption holding up, the Eurozone economy is on its best run since the global financial crisis. His carefully nuanced statement underlined how fragile that recovery remains, but the bank upgraded its 2016 Eurozone growth forecast to 1.6pc this year from the 1.4pc predicted in March, maintaining its forecast of 1.7pc next year and trimming it for 2018 to 1.7pc from an earlier 1.8pc forecast. (Reuters)