The dangers to the economy of the euro zone have evolved in a negative way, according to the president of the European Central Bank (ECB), Mario Draghi, who has acknowledged that the most recent data are still weaker than expected, confirming that the risks for the eurozone's outlook "have shifted downwards", which takes away the prospect of a rise in interest rates in 2019.
"Risks to the growth prospects of the eurozone have shifted downwards due to the persistence of uncertainties related to geopolitical factors and the threat of protectionism, as well as vulnerabilities in emerging markets and volatility in financial markets," he said. Italian banker at the press conference after the meeting of the Governing Council of the ECB, which kept its monetary policy unchanged. In this regard, Draghi indicated that the ECB's advisers wereunanimous in his diagnosis on the greatest weakness of the economy of the euro zone and in the change in the balance of risks for growth, which underscores the need to maintain a "significant monetary policy stimulus" that supports the evolution of inflation in the medium term.
The Italian banker pointed out that the Council had not discussed the implications of this worsening at its meeting, focusing on assessing the situation and the reasons why the economy of the euro zone has reached this situation, as well as whether it will be a long-lasting phenomenon or transient. "There was unanimity in the Council that the probability of a recession is low," he added. In any case, the president of the ECB noted that the Governing Council of the ECB remains prepared to adjust all its instruments in an appropriate manner in order toe ensure that inflation continues to move towards the objective of price stability of the entity. On this issue, the president of the ECB acknowledged that several bankers had made reference to the long-term liquidity auctions during the meeting, although no decision had been taken on this tool, which he described as "very useful and effective" at the time. to facilitate the transmission of the monetary policy of the institution.
Maintains its position
The ECB decided on Thursday to maintain the reference interest rate for its refinancing operations at 0%, while the deposit facility rate will continue at -0.40% and that of the loan facility in the 0.25%. Interest rates will remain at these levels "until at least during the summer of 2019", as underlined by the monetary authority, after recalling that, "in any case", The necessary time will be kept at these levels so that inflation reaches the objective of being close to, but below 2% in the medium term. "The Governing Council intends to continue reinvesting, in full, the principal payments of the debt that expires under the asset purchase program for a prolonged period after the interest rates begin to rise," the authority explained.
The gross domestic product (GDP) of the euro zone registered a 1.6% annual expansion in the third quarter of 2018, according to the latest Eurostat. At its December meeting, the ECB reduced to 1.9%, from the previous 2%, the growth forecast for 2018, while for 2019 it estimated a growth of 1.7%, also one tenth less than the previous forecast. On the other hand, the year-on-year inflation rate in the euro area was last December at 1.6%, compared to 1.9% in November, which represented the lower price increase since April 2018.
The next meeting of the Governing Council of the body responsible for the monetary policy of the euro area will be held on 7 of March.