ECB President Mario Draghi said “the outlook for the euro area fundamentally depends on global growth momentum”. And he warned “the escalation of trade tensions, the downturn in global manufacturing and a turn in the tech cycle have increased the euro area’s external headwinds.”

ECB Chief Economist Peter Praet, on the other hand, sounds relatively more optimistic. He said “there are good reasons to say that the economy is going to stabilize, it’s probably stabilizing somewhere in the second quarter … That’s our scenario and I still believe in that scenario.”

On market pricing, Praet said “the OIS curve that came after the Watchers’ conference in Frankfurt is something that fits well with how we think financial conditions should be today”. Overnight Indexed Swap (OIS) curve suggests that money markets are not pricing in a rate hike from ECB for the next 21 months.

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