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June 06, 2019MONETARY POLICY: EURO AREA At today’s meeting, the Governing Council of the European Central Bank (ECB) announced that the key ECB interest rates are unchanged with the interest rates on main refinancing operations, marginal lending facility and the deposit facility at 0.00%, 0.25% and -0.40% respectively. The rates are expected to remain at their present levels at least through the first half of 2020 (previously end of 2019) and for as long as necessary in order to converge inflation levels to around 2 per cent over the medium term.
In the first quarter of 2019, euro area real GDP increased 0.4 per cent over the previous quarter. The ECB is projecting weaker growth for the second and third quarters of 2019, due to expected weakness in international trade and global uncertainties. Services, the construction sector, and the labour market are expected to improve. Economic conditions are supported by favourable financing conditions, an expansionary euro area fiscal stance, employment gains and higher wages, and global economic growth. The ECB projections for real GDP growth are up 0.1 percentage points to 1.2 per cent in 2019, down 0.2 percentage points to 1.4 per cent in 2020, and down 0.1 percentage points to 1.4 per cent in 2021.
Inflation in the euro area was 1.7 per cent in April and declined to 1.2 per cent in May 2019. Underlying inflation continues to be muted, but the ECB expects underlying inflation to increase over the medium term, supported by monetary policy measures, economic expansion and wage growth. The ECB projections for annual inflation for the euro area is at 1.3 per cent in 2019, 1.4 per cent in 2020 and 1.6 per cent in 2021, largely unchanged from the previous projections made in March 2019
Sources:
European Central Bank
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