European Central Bank Forum Speeches

Mario Draghi, President of the ECB

Muted inflation expectations

“We see growth above trend and well distributed across the euro area, but inflation dynamics remain more muted than one would expect on the basis of output gap estimates and historical patterns.”

Challenges to reflation

“monetary policy is working to build up reflationary pressures, but this process is being slowed by a combination of external price shocks, more slack in the labour market and a changing relationship between slack and inflation. The past period of low inflation is also perpetuating these dynamics”

Monetary accomodation still needed

“While there are still factors that are weighing on the path of inflation, at present they are mainly temporary factors that typically the central bank can look through. However, a considerable degree of monetary accommodation is still needed for inflation dynamics to become durable and self-sustaining.”

 

Mark Carney, Governor of the Bank of England

Firming global growth

“The Bank of England estimates that more than 80% of the world economy is now growing above potential. Global measures of industrial production and capital goods orders, as well as world trade, have strengthened markedly over the past year…With that more favourable outlook, investment intentions are now rising around the world”

Easing on the horizon

“Some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional.”

 

http://www.bankofengland.co.uk/publications/Documents/speeches/2017/speech986.pdf

https://www.ecb.europa.eu/press/key/date/2017/html/ecb.sp170627.en.html

 

Stephen Poloz, Bank of Canada Governor on CNBC

On the initiatives by the US government

“Well we’ve given up modelling specific initiatives because it’s taking some time to come into focus and we think whenever something concrete is tabled we’ll have then time to do the modelling and understand it. I think at the company level people have just been weighing this extra layer of uncertainty about the future…those uncertainties are holding back investment decisions even though investment is picking up. It’s picking up less than it would without that uncertainty. So it’s a bit of a headwind.”

ECB Press Conference 8th June 2017

Mario Draghi – President of the ECB

Don´t expect rates to go lower

“we decided to keep the key ECB interest rates unchanged. We expect them to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases.”

A stronger growth momentum

“The information that has become available since our last monetary policy meeting in late April confirms a stronger momentum in the euro area economy, which is projected to expand at a somewhat faster pace than previously expected….Incoming data, notably survey results, continue to point to solid, broad-based growth in the period ahead. ”

Inflation has not picked up

“the economic expansion has yet to translate into stronger inflation dynamics. So far, measures of underlying inflation continue to remain subdued…. At the same time, measures of underlying inflation remain low and have yet to show convincing signs of a pick-up, as unutilised resources are still weighing on domestic price and wage formation. Underlying inflation is expected to rise only gradually over the medium term….the risk of deflation has dissipated”

GDP growth revised upwards

“These projections foresee annual real GDP increasing by 1.9% in 2017, by 1.8% in 2018 and by 1.7% in 2019. Compared with the March 2017 ECB staff macroeconomic projections, the outlook for real GDP growth has been revised upwards over the projection horizon.”

ECB President Mario Draghi in Brussels

Increasingly Solid economic growth

The economic upswing is becoming increasingly solid and continues to broaden across sectors and countries. Real GDP in the euro area has expanded for 16 consecutive quarters, growing by 1.7% year-on-year during the first quarter of 2017. Unemployment has fallen to its lowest level since 2009. Consumer and business sentiment has risen to a six-year high, supporting expectations of a further strengthening of growth in the coming months.”

Inflation is subdued

“Despite a firmer recovery, and looking through the volatile readings in HICP inflation over recent months, underlying inflation pressures have remained subdued. Domestic cost pressures, notably from wages, are still insufficient to support a durable and self-sustaining convergence of inflation toward our medium-term objective.”

Monetary accomodation set to continue

“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.”

 

https://www.ecb.europa.eu/press/key/date/2017/html/ecb.sp170529.en.html

European Commission Spring Forecast

Inflation to pick up

“Inflation has risen significantly in recent months, mainly due to oil price increases. However, core inflation, which excludes volatile energy and unprocessed food prices, has remained relatively stable and substantially below its long-term average. Inflation in the euro area is forecast to rise from 0.2% in 2016 to 1.6% in 2017 before returning to 1.3% in 2018 as the effect of rising oil prices fades away.”

Private Consumption to recover

“Private consumption, the main growth driver in recent years, expanded at its fastest pace in 10 years in 2016 but is set to moderate this year as inflation partly erodes gains in the purchasing power of households. As inflation is expected to ease next year, private consumption should pick up again slightly.”

Deficits to decline

“Both the general government deficit-to-GDP ratio and the gross debt-to-GDP ratio are expected to fall in 2017 and 2018, in both the euro area and the EU. Lower interest payments and public sector wage moderation should ensure that deficits continue to decline, albeit at a slower pace than in recent years.”

 

http://europa.eu/rapid/press-release_IP-17-1237_en.htm