Highlights of the ECB Press Conference
September 2, 2010
The European Central Banks raised its forecast for the economic growth of the 16-country zone from 1% yo 1.6% for the remaining of the year and from 1.2% to 1.4% for 2011. It also updated inflation expectations for this year from 1.5% to 1.6% as part of its growth and inflation forecast updates every three months.
Leaving the benchmark interest rate unchanged, the ECB said it will extend emergency bank lending on a "full allotment" basis, indicating continuing uncertainties in the economy.
ECB President Jean-Claude Trichet said that he expects the economy to grow at a moderate pace. The ECB will continue to conduct its main refinancing operations, or MRO and its special-term refinancing operations at least until January. It will also be conducting three-month long term refinancing operations every month in the last quarter of 2010.
The euro rose slightly after Mr.Trichet's remarks, but yields were mainly unchanged.
The following is a summary of the conference by an economist at BNP Paribas:
Main points of interest from the ECB press conference. Decision to roll forward the fixed rate full allotment procedure on all operations until year-end was only by consensus, not unanimous, hinting at dissention, presumably by some of the more hawkish GC members. ECB remains 'in the process of phasing out' its non-standard measures. Growth forecast for 2010 revised sharply upwards, as expected, but risks no longer balanced but 'slightly tilted to the downside'. Inflation forecasts were tweaked higher and risk assessment is no longer balanced but 'tilted slightly to the upside', mainly linked to external factors like commodity prices. Our concern remains that some at the ECB are in too much of a hurry to normalise policy in what is a far from normal environment.
The European Central Banks raised its forecast for the economic growth of the 16-country zone from 1% yo 1.6% for the remaining of the year and from 1.2% to 1.4% for 2011. It also updated inflation expectations for this year from 1.5% to 1.6% as part of its growth and inflation forecast updates every three months.
Leaving the benchmark interest rate unchanged, the ECB said it will extend emergency bank lending on a "full allotment" basis, indicating continuing uncertainties in the economy.
ECB President Jean-Claude Trichet said that he expects the economy to grow at a moderate pace. The ECB will continue to conduct its main refinancing operations, or MRO and its special-term refinancing operations at least until January. It will also be conducting three-month long term refinancing operations every month in the last quarter of 2010.
The euro rose slightly after Mr.Trichet's remarks, but yields were mainly unchanged.
The following is a summary of the conference by an economist at BNP Paribas:
Main points of interest from the ECB press conference. Decision to roll forward the fixed rate full allotment procedure on all operations until year-end was only by consensus, not unanimous, hinting at dissention, presumably by some of the more hawkish GC members. ECB remains 'in the process of phasing out' its non-standard measures. Growth forecast for 2010 revised sharply upwards, as expected, but risks no longer balanced but 'slightly tilted to the downside'. Inflation forecasts were tweaked higher and risk assessment is no longer balanced but 'tilted slightly to the upside', mainly linked to external factors like commodity prices. Our concern remains that some at the ECB are in too much of a hurry to normalise policy in what is a far from normal environment.
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