At today’s meeting the Governing Council of the European Central Bank(ECB) announced that key ECB interest rates are unchanged.  Monthly asset purchases of €80 billion will run until the end of March 2017. From April 2017 through December 2017, asset purchases will continue at a €60 per month pace. Asset purchases may continue into 2018 if the ECB does not see a sustained adjustment in inflation.

Euro area real GDP continued a similar pace in Q4 with an increase of 0.4 per cent. Recent indicators have increased ECB's confidence that the expansion will continue and broaden. Monetary policy is supporting domestic demand and facilitating the deleveraging process. Investments continue to be promoted by favourable financing and improving corporate profitability. Consumption and household incomes are supported by rising employment. There are signs of a stronger global recovery and increasing trade. The ECB projections for euro area growth were revised slightly upwards to 1.8 per cent in 2017, 1.7 per cent in 2018, and 1.6 per cent in 2019.

Annual inflation increased to 2.0 per cent in February, up from 1.8 per cent in January and 1.1 per cent in December 2016. Strong increase in energy and unprocessed food prices were key contributors with no signs of an increase in underlying inflation pressures. The projections for inflation were revised up significantly for 2017 to 1.7 per cent before increases of 1.6 per cent in 2018 and 1.7 per cent in 2019. Measures for underlying inflation are expected to rise only gradually over the medium term as the economic recovery continues and slack is absorbed.

Sources:
European Central Bank