听-Draghi - optimistic about the economic outlook听
As expected, the European Central Bank's (ECB) July meeting was "uneventful". The Bank kept interest rates constant and in line with market expectations, and did not change its monetary policy stance or its risk assessment of the euro area.
The Governing Council of the ECB agreed that the interest rate on main refinancing operations, on marginal lending facilities, and the deposit facility would remain unchanged at 0.00 percent, 0.25 percent and -0.40 percent, respectively.听
The Governing Council expects that key ECB interest rates would remain at their present levels at least through to the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 percent over the medium term.
听
Draghi's prepared remarks did not reveal any surprises or major changes for June.听
The ECB noted that the most recent economic indicators have stabilized, as opposed to their reports of weakening at the June meeting, but the balance of risks around growth was still considered "broadly balanced."听
On inflation, the language was identical to the June statement, with the ECB hopeful and optimistic that underlying inflation would pick up going forward.
Draghi was asked further questions on the protectionism threat with rising trade tensions between the U.S. and Europe and about last night's meeting between President Donald Trump and President of European Union Commission Jean-Claude Juncker in the Q&A session. Draghi said the ECB "took note" of the meeting, and he considers that in general, it was a good sign. But he added that it is difficult to comment beyond this point at present.
听Draghi also stated that the euro area鈥檚 economic recovery is proceeding along its solid and broad-based path. However, he advised that the risk of persistent heightened financial market volatility requires monitoring.
听On the other hand, according to the ECB Q3 2018 ECB Survey of Professional Forecasters, inflation expectations have been revised upwards for 2018 and 2019, but remain unchanged for 2020 with longer-term expectations remaining stable at 1.9 percent.
And real GDP growth expectations have been revised downwards for 2018 and 2019, but unchanged for 2020. Unemployment rate expectations show little change.
-The week ahead
This week, because of the summer holiday season, data reports are scant, but markets will follow Germany's inflation data that will be released.