ECB Chief Economist Peter Praet said in in an event in Brussels today that economic conditions in Eurozone remain good. Recent data softness was partly due to temporary factors and “supply constraints” only. But he noted “there are some clouds and we should be watchful because that can go into confidence in a more fundamental way.” Those clouds include the loose fiscal policy of Italy’s new eurosceptic government, as well as international trade tensions.
ECB Governing Council member Vitas Vasiliauskas also noted that geopolitical factors would be analyzed before the central bank make a decision on its asset purchase program. In particular, Vasiliauskas noted the markets have already reacted to the Italian government change. And he said ECB has to take that into account.
