ECB Governing Council Meeting: No Change in Stance Was Expected, and None Got Delivered

April 10, 2019

At the ECB Governing Council meeting, the structure of Euroland central bank interest rates since March 2016 (a zero percent refinancing rate flanked by an overnight deposit rate of -0.40% and a marginal lending facility rate of 0.25%), was again retained, and forward guidance reaffirmed that rates would stay at present levels or lower at least through yearend. As announced previously, the ECB is back in the business of doing targeted LTROs, and maturing principal on securities acquired under its now-ended asset purchase program will continue to be reinvested well beyond the start of interest rate normalization. In a released statement and ECB President Draghi’s press conference, several global growth headwinds were noted, but several positive factors were mentioned as well. While growth risks remain tilted to the downside, the baseline forecast doesn’t foresee the current slowdown giving way to outright recession, and Draghi attached low odds to that possibility. The statement projects lower headline inflation in coming months, but anticipates upward trajectories in labor costs and core inflation.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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