ECB chief sees 'some signs' of stabilisation in euro area economy

By Alexander Bueso

Date: Thursday 12 Dec 2019

ECB chief sees 'some signs' of stabilisation in euro area economy

(Sharecast News) - Policymakers at the European Central Bank sounded a slightly more positive note on the outlook for economic growth and inflation in the single currency bloc, but continued to keep all its options open, while calling on euro area national governments to increase fiscal spending where possible and necessary.
The governing council's somewhat more upbeat outlook was reflected in the latest ECB staff macroeconomic projections, which were also published on Thursday.

ECB staff now see the Eurozone's gross domestic product expanding at rates of 1.2% in 2019 and 1.1% in 2020 but picking up to a clip of 1.4% over the subsequent two years.

Newly-arrived ECB chief, Christine Lagarde, echoed that assessment in her post-meeting press conference, highlighting how US-China trade talks appeared to be "headed in a better direction", although she refused to be drawn into "betting" on the exact outcome and possible timelines.

So too, Lagarde said that the UK general election, on Thursday, might clear up some of the uncertainty around the outlook for the UK's withdrawal.

On inflation, the ECB president said she was "concerned" by the fact that consumer price inflation was one or two percentage points below where she would rather that it be.

However, she stressed how the staff projections were for CPI to accelerate to a 1.7% pace in the last quarter of 2022 and at one point during her presser, when asked if she though the euro area was suffering from "Japanification", answered "I do not think we are there at all".

To take note of, Lagarde said she welcomed the implementation of other policies to support the reduction of "slack" in the euro area economy.

Lastly, and regarding the ECB's review of its policy strategy, Lagarde announced that it would be conducted throughout 2020 and should end at the conclusion of that year.

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