The European Central Bank will retain an “accommodative” policy signaled the board member Benoit Coeure on Friday morning.
Coeure spoke to CNBC on the sidelines of the European House Ambrosetti Forum, the very day the Chinese-American tariff announcements were entering the third round. While European officials emphasise the resilience of the Eurozone’s economy, there are concerns that the EU will not be able to remain in the sidelines.
In January the ECB signaled the gradual unwinding of the Eurozone’s quantitative easing programme, in the context of positive growth and a sustained surge in employment. However, inflation remains well below the 2% target.
Data on published by Eurostat earlier this week suggest that although inflation picked up in March to 1,4%, core inflation remains in the region of 1% (that is, inflation without volatile products such as food and energy). Core inflation is expected to remain stack at current levels throughout 2018 and 2019. Recently, the Finnish member of the ECB Erkki Liikanen board warned that an extension of the quantitative easing programme should not be ruled out.
The President of the ECB, Mario Draghi, signaled in March that quantitative easing could be unwound as the economy gains momentum. The ECB expects the Eurozone’s economy to expand by 2,4% in 2018 and just under 2% in 2019.
The value of the Euro may soon become an issue as Germany is by far the biggest trade surplus nation a share of its GDP. The German economy is accelerating amidst a weak Euro policy and comparatively low German wages, while Berlin takes pride in a sustained budget surplus policy.