European Central Bank policymakers have acknowledged the economic recovery in the eurozone is becoming stronger.
The cyclical recovery of the euro area economy is becoming increasingly solidECB President
At the same time they kept stimulus programmes and interest rates unchanged at the regular ECB Governing Council meeting.
ECB head Mario Draghi quickly dismissed a question on whether the second round of France’s presidential election had influenced the timing of their decisions: “We actually don’t do monetary policy based on likely election outcomes.”
Draghi said he was more focused on the euro area’s “increasingly solid” and broad economic recovery but too weak inflation.
On the threat to growth from Trump’s protectionist tendencies he said: “Perhaps the risk of trade protectionism may have somewhat receded. Certainly markets are in the course – not us but markets – are in the course of a reassessment of the US fiscal policy. And I frankly wouldn’t feel like going beyond that.”
Financial markets found Draghi’s comments on the eurozone economy more cautious than they had expected and the euro fell against the dollar.
The central bank remains under pressure, particularly from German policymakers, to start winding down stimulus and look towards raising interest rates.
“There’s enough from today to suggest that we might see a material change in policy in June,” James Athey, an investment manager at Aberdeen Asset Management, said.
“But no one should get ahead of themselves. There’s clearly not enough consensus on the Governing Council.”