Weaker eurozone growth due to trade tensions, European Central Bank chief says

Weaker eurozone growth due to trade tensions, European Central Bank chief says

Weaker eurozone growth due to trade tensions, European Central Bank chief says

The ECB stated that it would keep its asset purchase programme in place until at least September, and would continue it on further if necessary.

Mario Draghi said policy makers refrained from discussing the end of asset purchases or even the stronger euro as they focused on gauging the health of the region's economy.

"Incoming information since our meeting in early March points towards some moderation, while remaining consistent with a solid and broad-based expansion of the euro-area economy", Draghi said.

Interest rates on the main refinancing operations were unchanged at 0.00 percent, according to a statement from the ECB's Governing Council.

"Despite emphasising downside risks more than before, the ECB tried to not sound overly concerned", said economist Holger Schmieding of Berenberg bank.

"The Governing Council expects the key European Central Bank interest rates to remain at their present levels for an extended period of time, and well past the horizon of net asset purchases", the European Central Bank said in a statement, repeating its long-standing guidance on interest rates. The bank suggested that rates would remain lower for a while after quantitative easing ended.

Lower interest rates and QE are created to pump cash through the financial system and into lending to firms and households - powering economic growth and inflation.

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Rate setters spent most of Thursday's meeting debating the uncertain economic outlook.

Even if the single currency's rise has petered out for now, exporters like Continental and Volkswagen flagged the exchange rate as a risk.

A key worry is that protectionist rhetoric from the United States could push down the value of the dollar even as the Federal Reserve is likely to raise interest rates several times this year, to support the U.S. currency.

But the ECB has long fallen short of its central price stability objective of inflation just below 2.0 percent. It is up around 1.5 percent against the US dollar so far this year and was trading at $1.2155 shortly after 1 p.m. London time. However, frequent suggestions of underlying weak inflation have called that timeline into question.

Draghi said a range of one-off factors including cold weather, labor strikes and the timing of the Easter holiday period had contributed to weakness seen in a number of read-outs across the euro zone in recent weeks.

Even if the currency impact were to bite, the European Central Bank has little scope to extend purchases much longer, suggesting it will take an extremely cautious approach to normalising policy, even if it risks erring on the side of caution and moving too late.

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