Yesterday Mr Draghi, ECB president, was given a bit of a rough ride by lawmakers in Holland as they pushed and pushed for answers to questions regarding ECB monetary policy and the timing of a wind down in monetary stimulus. According to reports legislators did appear to upset him on a number of points. However he did keep his cool refusing to give anything away adding it was too soon to consider a wind down, despite a ‘firming, broad-based upswing in the economy’. The Dutch lawmakers are some of the most critical of the ECB’s easy monetary policies and claim that the ECB have overstepped their mandate, burdening savers and pension providers, and stoking asset bubbles. Not sure the populace of Greece and the Mediterranean countries would agree with the Dutch lawmakers stance but ’one for all and all for one’ as D’Artagnan would say was not very evident.
Then today we had the European commission’s economic forecasts, the first since the UK triggered Brexit. They backed up the ECB stance saying ‘risks had become more balanced, though they remain tilted to the downside’. Adding it was too early to consider withdrawing stimulus, and cut their inflation outlook to just 1.3% for 2018, way below the ECB‘s target rate. Obviously the commission is buoyed by the defeat of Marie Le Pen in France and Geert Wilders in Holland as both anti-EU candidates had caused concern and added risk to the ‘one Europe’ outlook. They expanded their growth forecast to 1.7% from 1.6% this year and 1.8% in 2018.
Regarding the risks they reported ‘External risks are linked, for instance, to future U.S. economic and trade policy and broader geopolitical tensions’ and ‘China’s economic adjustment, the health of the banking sector in Europe and the upcoming negotiations with the U.K. on the country’s exit from the EU are also considered as possible downside risks in the forecast.’ We leave the last word to Mr Draghi as he heads home from his Dutch encounter ‘The economic recovery has evolved from being fragile and uneven into a firming, broad-based upswing’ the ECB president said. ‘Nevertheless, it is too early to declare success.’
Data dependent, where have we heard that before?