Eurozone growth momentum has softened since the start of the year, but is expected to remain solid and broad-based, European Central Bank President Mario Draghi said Thursday.
“This moderation may in part reflect a pull-back from the high pace of growth observed at the end of last year, while temporary factors may also be at work,” Draghi said in the introductory statement to his customary post-decision press conference in Frankfurt.
“Overall, however, growth is expected to remain solid and broad-based,” he added.
Earlier on Thursday, the Governing Council left the key interest rates, asset purchases and the forward guidance unchanged.
The risks surrounding the euro area growth outlook remain broadly balanced, Draghi said.
As widely expected, he referred to the rising global trade war concerns.
“Risks related to global factors, including the threat of increased protectionism, have become more prominent,” Draghi said.
Further, the ECB Chief warned that recent protectionism incidents have a profound and rapid effect on business and exporters’ confidence and that in turn can effect the growth outlook.
Speaking to reporters, Draghi said the loss of growth momentum was “pretty broad across countries and sectors”.
Despite the loss of momentum, Draghi said the underlying strength of the euro area economy continues to support policymakers’ confidence that inflation will converge towards the ECB’s aim of “below, but close to, 2 percent” over the medium term.
Meanwhile, inflation is yet to show a convincing upward trend, he noted, reiterating the need for “patience, prudence and persistence”.
The bank expects underlying inflation, which is currently subdued, to rise gradually over the medium term, supported by the monetary policy measures, the continuing economic expansion, the corresponding absorption of economic slack and rising wage growth.
“The Governing Council will continue to monitor developments in the exchange rate and other financial conditions with regard to their possible implications for the inflation outlook,” Draghi said.
“Overall, an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up and support headline inflation developments over the medium term.”