The ECB’s meeting yesterday highlighted that things aren’t looking particularly rosy for the Eurozone. Although not entirely unexpected, Euro weakened against the pound as growth forecasts were slashed from 1.7% to 1.1%, one point below the forecasted reduction.
The single currency zone’s central bank also confirmed that interest rates would not be raised – and it seems likely this will not happen now until next year.
Mario Draghi said at the press conference, in a clear reference to problems with Italy, Germany’s economy and Brexit, that the ‘…persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment… The impact is turning out to be somewhat longer-lasting, which suggests that the near-term growth outlook will be weaker than previously anticipated.’
Investors were somewhat cheered by the new TLTRO (targeted long-term refinancing operations) package, whereby cheap loans will help stabilise European banks and stimulate more lending to households and business.
