At today’s meeting The European Central Bank dropped language saying that interest rates might fall further from its post-meeting statement. In April the bank had said that interest rates would remain at “present or lower levels for an extended period of time.” Today’s statement only says that interest rates would remain at “present levels for an extended period of time.”
As expected the bank’s Governing Council said nothing about ending the current program of asset purchases. The ECB currently purchases 60 billion euros ($67 billion) of debt each month. Economists expect that program to continue at least to the end of 2017. Economists surveyed by Bloomberg think the bank will wait until its September meeting before making any announcement on its asset purchase program.
At his post-meeting press conference bank president Mario Draghi said inflation will run at 1.5% in 2017 and at 1.3% in 2018. That would be below the central bank’s target of just under 2%. Both forecasts are below those of March when the bank projected 2017 inflation at 1.7% and 2018 inflation at 1.8%.
The euro was slightly lower on the news at $1.1257, down from yesterday’s close at $1.1218. That’s a slide of 0.35%.