ECB forecasts don't have a lot of room for downgrade

Author: Adam Button | Category: Central Banks

The ECB meeting is on Thursday

The ECB will reportedly lower its growth forecasts in tomorrow's press conference, blaming softer global demand.

At the moment, here are the forecasts for growth:

  • 2018 +2.1%
  • 2019 +1.9%
  • 2020 +1.7%

And inflation:

  • 2018 +1.7%
  • 2019 +1.7%
  • 2020 +1.7%

The ECB doesn't have much room for a downgrade in growth before they're forced to lower inflation forecasts that are already missing the target.

The report doesn't say how much growth will be cut. It could just be something like 2.0% this year instead of 2.1%, which is marginal but the reports says the technical committee also sees downside risks to growth moving forward.

Inflation targets won't be changed, according to the report, but you need some growth to spark inflation and with a seeming infinite array of headwinds, it's tough to come by. The problem is that Draghi & Co have invested a year in preparing the market for the taper so there's no turning back now.

As for the euro, expect Draghi to try for some positive spin but the highs in the euro over the past few months have been lower and that doesn't bode well.

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