Euro is choppy against the pound, as the latter comes under political pressures. The European Central Bank has just published its economic bulletin this morning, which highlighted the risks the Eurozone economy amid a general economic slowdown. GDP forecasts have been revised down to 1.1% and 1.2% for 2019 and 2020 respectively, pointing to ‘declining global investment and rising policy and political uncertainty on account of Brexit and the renewed intensification of trade tensions between the United States and China.’ The expectation, the ECB says, is for growth to recover in the medium term, but still remain short of long-term averages. However, the bank does expect a ‘mildly expansionary’ fiscal stance, which will ‘provide some support for economic activity.’
Reports are emerging of a division within the ECB, despite Mario Draghi’s assurances that the bank’s stimulus package had been agreed by ‘broad consensus’. Bundesbank President Jens Weidmann told the media that ‘such a far-reaching package was not necessary’, while De Nederlandsche Bank’s President Klaas Knot criticised it as ‘disproportionate’, following up on comments from the Bank of France’s Francois Villeroy de Galhau, saying that it was ‘unnecessary for now’. Robert Holzmann, Governor of the Austrian National Bank, has gone further, highlighting that ECB can change its own decisions. Perhaps Christine Lagarde will find a less consensual bank when she takes up her post in just over a month’s time.
