EUROPE POST-BREXIT: Investors are watching for a news conference by the European Central Bank governor, Mario Draghi, to see what he might do to shore up regional growth.
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Looking forward to the weekend, today will be PMI day with a major focus on Europe and the United Kingdom, where the Brexit vote should show the first signs of how it has impacted the wider services and manufacturing sectors in the Euro zone.
Respondents kept their forecast for 2016 inflation unchanged at 0.3%, while trimming their predictions for the 2017 and 2018 rates by 0.1 percentage point from the April survey, to 1.2% and 1.5%, respectively.
“Large uncertainties prevail. These figures depend on how long the stretch of time is going to be for these negotiations to be completed and to [achieve] a certain outlook, which we don’t have with us today”.
Draghi said nothing that surprised the market. “We haven’t observed any disruption either in financial markets or the banking sector”.
The head of the European Central Bank said it was ready, willing and able to act if needed after the United Kingdom voted to quit the EU. They expect the European Central Bank to decide later this year to extend the bond-buying program by six months until September 2017.
Yesterday, the European Central Bank released its most recent monetary policy statement.
Ahmed said the consensus view is that the ECB’s monetary policy “is likely to remain easy” for the foreseeable future. Draghi emphasized that the euro area countries must step up implementation of structural reforms to reduce structural unemployment and boost potential output growth in the euro area. After many years of QE, the economy is not coming back with a clear comparison of a steady U.S. economy.
“We have continued easy money, no signs of any interest rate rises”, Cordier said in a telephone interview.
Draghi also said the Governing Council didn’t discuss tapering its asset purchases.
“On the other hand, the market-based expectations show a significant decline (in inflation expectation). then a recovery”.
Mr Draghi said: “Following the United Kingdom referendum on European Union membership, our assessment is that euro area financial markets have weathered the spike in uncertainty and volatility with encouraging resilience”.
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ECB chief Mario Draghi said on Thursday that technicalities would not stand in the way of the asset buys and that the bank would reassess policy after fresh economic projections in September.
