FRANKFURT, Germany (AP) — The Latest on the European Central Bank’s monetary policy meeting (all times local):
European Central Bank head Mario Draghi says inflation indicators “have yet to show convincing signs of a pickup.”
Draghi made the statement as the central bank lowered its forecasts for inflation this year to 1.5 percent from 1.7 percent, and for next year to 1.3 percent from 1.6 percent.
The statement that inflation remains weak supports the central bank’s reluctance to announce an end to its bond-buying stimulus program or to raise interest rates from record lows. The 60 billion euros ($67 billion) per month in bond purchases are to run at least through the end of the year. Analysts think the purchases will be tapered next year, but the central bank has moved gingerly in indicating when it might be ready to announce a schedule for reducing and then ending them.
The bond purchases, made with newly printed money, are aimed at increasing inflation from its current annual 1.4 percent toward the central bank’s goal of just under 2 percent.
European Central Bank head Mario Draghi says risks to Europe’s strengthening economic recovery have diminished.
Draghi said at a news conference Thursday that risks to growth are now “broadly balanced.” At the bank’s last meeting in April, Draghi said risks were “tilted to the downside.”
It was a small verbal step toward an announcement, expected later this year, that the bank will taper and end its extraordinary monetary stimulus as growth and inflation improve. Analysts think the bank might announce that in September.
On Thursday, the bank left its bond purchase stimulus unchanged at 60 billion euros per month through at least the end of the year and longer if necessary. The measure pumps newly printed money into the economy in an effort to raise inflation toward the bank’s goal of just under 2 percent considered best for the economy.
The European Central Bank has left its stimulus programs and record low interest rates unchanged, despite an accelerating economy in the 19 countries that use the euro currency.
The bank took a tiny step toward an eventual exit from the stimulus by dropping wording in its statement saying it could lower interest rates even further.
But the bank’s announcement Thursday reiterated that its stimulus in the form of monthly bond purchases could be stepped up if the economic outlook worsens.
Analysts expect that provision to be dropped in coming months as the bank edges toward announcing how it will phase out the bond purchases next year.
Europe’s economy grew 0.6 percent in the first quarter but ECB President Mario Draghi says the brighter outlook is largely the result of the stimulus and that recovery still needs support.
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