Mario Draghi has today updated us on the ECB’s view of the economy and reassured the market that there will be no tapering of ECB stimulus in the near future.
Draghi said bond market swings were here to stay and market participants should prepare for an extended period of volatility as the ECB conducts their QE programme.
“There is a very strong belief that they are doing the right thing: that QE is absolutely necessary whatever the collateral effect on markets…That is something investors something have to understand and deal with,” says Franck Dixmier, chief investment officer for European fixed income at Allianz Global Investors.
The ECB has decreased their growth expectations for 2017 to 2.0% and kept 2015 and 2016 unchanged at 1.5% and 1.9% respectively.
Although the stimulus package is expected to boost growth in the long term, Draghi made it clear that liquidity injections alone were not enough. He pointed towards the governments of European nations to push through much needed structural reforms to support the ECB programme.
In regards to the Greek crisis, Draghi said he had met with Angela Merkel and Francois Hollande but did not comment on the specifics of the meeting although he did say he would like Greece to remain in the Euro.
