Prime News: ECB to Maintain to ‘Steady Hand’ Amid Eurozone Growth Slowdown

The eurozone’s central bankers want to maintain “a steady hand” as they continue to plan for the removal of their crisis-era stimulus amid concern that the slowdown in growth may prove more than a blip.

The bank also warned that it needed to strengthen its message on government spending in the face of events in Italy.

After a strong 2017, growth in the opening months of this year has been slower in the eurozone. Most economists view the setback as temporary — though weak sentiment surveys for the second quarter have raised concern of a longer-lasting period of lower growth.

While policymakers at the European Central Bank said in minutes of the governing council’s meeting in late April that the region’s growth remained “broadly intact”, they acknowledged that the uncertainty surrounding the economic outlook had “clearly increased”.

The ECB said in the minutes: “There was broad agreement among members that it was warranted to reinforce calls for existing fiscal rules to be respected and for fiscal buffers to be rebuilt, in particular with regard to those member states with high levels of government debt.”

The slowdown and political events have left policymakers in a bind. The council has signalled that it would like to stop buying new bonds under the €2.4 trillion quantitative easing programme by the end of the year and could begin to raise rates from their current record lows around the middle or during the second half of next year.

However, a spell of weak growth could force the council to delay its exit. While most expect QE to come to an end in December, markets are pushing back their expectations of when the bank will raise rates to later in 2019.

The material has been provided by InstaForex Company – www.instaforex.com

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