ECB sticks to stimulus exit plan despite ‘uncertainties’
AFP – European Central Bank chief Mario Draghi on Thursday played down risks to the eurozone economy in the face of rising "uncertainties", as the bank stuck to its plan to scale back stimulus this year.
"Uncertainties relating to rising protectionism, vulnerabilities in emerging markets and financial market volatility have gained more prominence recently," Draghi told reporters in Frankfurt.
But he added that the ECB remained confident in the "underlying strength" of the euro area economy.
Bank governors decided earlier to hold interest at record lows until well into 2019, and confirmed their intention to wind down their massive bond purchases to zero by the end of the year.
Draghi’s sangfroid comes despite growing threats on the horizon, from trade spats sparked by US President Donald Trump’s "America First" policies to currency crises in Turkey and Argentina and fresh worries about Italian debt.
"A major source of uncertainty we see in the global outlook comes from rising protectionism," Draghi said.
Unveiling the ECB’s latest growth projections, Draghi said the bank had slightly lowered its forecast for the eurozone for this year and 2019.
The Italian central banker blamed the revision mainly on "a somewhat weaker contribution from foreign demand".
The bank now expects growth of 2.0 percent in 2018 and 1.8 percent in 2019, down from 2.1 and 1.9 percent in previous staff projections.
The outlook for 2020 remained unchanged at 1.7 percent.
The bank continues to expect inflation to hit 1.7 percent from 2018 to 2020.