3/7/2019, 2:40 PM (Source: TeleTrader)
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ECB slashes outlook for economic growth, inflation

Mario Draghi warned on Thursday of a "sizeable moderation" in economic expansion, expected to continue, but said that the idiosyncratic factors acting as headwinds are beginning to fade. The president of the European Central Bank highlighted labor market dynamics and wage growth as favorable, against barriers from "geopolitical factors," protectionism and emerging markets.

The forecast for expansion this year was cut to 1.1% from 1.7%, determined in the December update, and by 0.1 percentage points to 1.6% for 2020. The perceived rate of economic growth was held at 1.5% for the year after that. Furthermore, the balance of risks continues to point downward, Draghi stressed.

Underlying inflation is muted, he noted and revealed the outlook for headline rise in consumer prices was slashed by 0.4 points to 1.2% for 2019. The harmonized gauge was lowered by 0.2 points each to 1.5% for next year and 1.6% for 2021. Policymakers today prolonged the forecast for no change in interest rates until at least the end of the year and announced another round of cheap loans for banks.

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