4/19/2017, 5:21 PM (Source: TeleTrader)
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Praet: ECB's projections have some upside risks

The recovery of the economy of the monetary union is accelerating, according to Peter Praet, member of the Executive Board of the European Central Bank. Speaking at a conference in New York on Wednesday, the policymaker said the upside risks to current forecasts concern the first and the second quarter of this year.

However, the long-term estimates remain tilted to the downside, he noted and cited potential political instability. Turning to the global economy, Praet said there are several headwinds and risks. He concluded central bankers in the euro area still have no maneuvering space for tighter policy and that eventually they will need to move in a patient and gradual way.

Praet outlined the benefits from the central bank's Securities Markets Programme (SMP) and Outright Monetary Transactions (OMT) but stressed the "confidence crisis" had undermined the banks’ "willingness and capacity to keep credit flowing in vast portion" of the Eurozone. Stricter borrowing conditions "amplified renewed slump," affecting macroeconomic stability and weighing on inflation, he said.

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