ECB President Mario Draghi didn’t sound too dovish in the post meeting press conference, nor were the new economic projections. he noted that “most recent information indicates that global headwinds continue to weigh on the euro area outlook”. And, “the prolonged presence of uncertainties, related to geopolitical factors, the rising threat of protectionism and vulnerabilities in emerging markets, is leaving its mark on economic sentiment.”
However, “further employment gains and increasing wages continue to underpin the resilience of the euro area economy and gradually rising inflation.” And, ECB is “determined to act in case of adverse contingencies and also stands ready to adjust all of its instruments, as appropriate”.
In the June 2019 Eurosystem staff macroeconomic projections for Eurozone, growth is projected to be at 1.2% in 2019 (revised up by 0.1%), 1.4% in 2020 (down by -0.2%) and 1.4% in 2021 (down by -0.1%). HICP is projected to be at 1.3% in 2019 (revised up by 0.1%), 1.4% in 2020 (revised down by -0.1%) and 1.6% in 2021 (unchanged).
Draghi noted that risks to growth outlook remain “tilted to the downside”.
EUR/USD dipped initially after the release in reaction to the change in forward guidance. But it’s then quickly rebounded and breaks yesterday’s high at 1.1304 on not-that-dovish Draghi.
