‘For domestic price pressures to strengthen, we still need very accommodative financing conditions, which are themselves dependent on a fairly substantial amount of monetary accommodation.’ – Mario Draghi, European Central Bank
The European Central Bank President Mario Draghi gave a speech at the European Parliament in Brussels on Monday. The ECB President acknowledged improving economic growth, but stated that stimulus and support measures were still needed to boost inflation. Apart from that, Draghi also pointed to weak wage growth in the Euro zone. Meanwhile, markets expected the Central bank to make a move at its June meeting amid pressures coming from more conservative economies, but Draghi’s dovish comments on Monday weakened the odds. However, analysts suggested that the Bank would likely improve its economic outlook at its next meeting amid solid economic growth and Emmanuel Macron’s victory in the French Presidential Election. The ECB President said that inflation was far behind the Bank’s 2% target and, therefore, policymakers were forced to keep rates and asset purchases unchanged. Following Draghi’s speech, analysts predicted that the next key decision for the ECB would unlikely come up until the autumn, when policymakers will need to decide whether to extend the Quantitative Easing programme or not.
