Notice: Trying to access array offset on value of type bool in /customers/5/5/b/ on line 212 Notice: Trying to access array offset on value of type bool in /customers/5/5/b/ on line 212

ECB keeps policy unchanged despite gloomy eurozone growth and Italy-EU budget row

Sticking to a guidance first unveiled in June and repeated at every meeting since, the group reaffirmed its €2.6 trillion ($2.97 trillion) asset purchase scheme will end this year and rates could rise after next summer,

The ECB said in a statement: ”The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019.”

Speaking at the ECB Governing Council in Frankfurt, Germany, ECB President Mario Draghi said he predicts inflation will rise toward the end of this year.

He said: “While measures of underlying inflation remain generally muted, they have been increasing from earlier lows.

“Looking ahead, underlying inflation is expected to pick up towards the end of the year and to increase further over the medium term.”

“The underlying strength of the economy continues to support our confidence that the sustained convergence of inflation to our aim will proceed and will be maintained even after a gradual winding down of our net asset purchases.”

Policymakers speaking in public and private have said the bar for extending the ECB’s bond purchase scheme is very high and that it is too early to reassess interest rate guidance, which calls for no change until “through” next summer.

The euro was boosted by the ECB announcement, and rose to a three-week high of 88.58 against the pound.

Eurozone growth skidded to its slowest rate in more than two years in October, figures released yesterday revealed, off the back of escalating US-China trade war fears and political tensions in Italy.

READ  Salary dues: Jet Airways pilots not to do additional duties

According to a flash composite purchasing managers’ index (PMI) from IHS Markit, eurozone PMI slowed to 52.7, down from 54.1 in September and marking the slowest level of growth recorded in 25 months.

ING economist Peter Vanden Houte said in a note: “The flash PMI (data) for October gives a first glimpse on where the euro zone economy is heading. And the picture is not terrific.”

IHS chief business economist Chris Williamson added: “The pace of Eurozone economic growth slipped markedly in October, with the PMI setting the scene for a disappointing end to the year.

“The survey is indicative of GDP growth waning to 0.3 percent in the fourth quarter, and forward-looking indicators, such as measures of future expectations and new business inflows, suggest further momentum could be lost in coming months.”

Growth predictions for the year ahead were the joint-lowest since December 2014, while manufacturing optimism stumbled to its lowest level in 70 months.

Italy has left the euro rattled after unveiling plans for a deficit budget of 2.4 percent of GDP – three times the previous administration’s target.

Bosses in Brussels took the unprecedented step of rejecting the Italian budget this week while demanding Rome submits new proposals within weeks.

Pierre Moscovici, the EU’s finance chief declared “public debt is the enemy of the people” as he declared the budget a “serious deviation” from recommendations set by the European Council in July.

Italian Prime Minister Giuseppe Conte has previously insisted he has no back-up plan for the budget after the EU demanded to alter his country’s spending rules.

READ  Post default, DoT lens on RCom-Jio spectrum deal

He said: “There isn’t any B plan.”


Leave a Reply