ECB Meeting: Here's What You Need to Know

In a recent monetary policy meeting held in Frankfurt, the European Central Bank (ECB) kept interest rates unchanged while keeping the bond buying at a run rate of 60 billion euros ($72.2 billion) per month. Subdued inflation and an uncertain exchange rate are the primary reasons for the continued expansionary stance of the ECB.

Interest rates are expected to remain at the current level for an extended period of time. Regarding quantitative easing, bond buying will continue at the pace of 60 billion euros until the end of 2017, or beyond if necessary. 

The medium-term outlook for inflation and growth remains unchanged for the eurozone. Despite strong economic growth, inflation lagged behind the target rate. 

GDP growth is improving

Economic growth in the eurozone looks stable with GDP expected to grow 2.2% and 1.8% in 2017 and 2018. Compared to the June 2017 projection, GDP growth has been revised upward by the ECB in the current outlook.

Economic growth is being supported by the expansionary monetary policy, according to the ECB. Quantitative easing is resulting in favorable financing conditions along with facilitating deleveraging, which in turn is resulting in corporate profitability, employment gains and demand growth.

Inflation stays under pressure

The ECB expects headline inflation to decline during the last part of the year. Improvement is yet to be seen in measures of underlying inflation. Annual HICP inflation is expected to be around 1.5% and 1.2% for 2017 and 2018, according to ECB Staff projections. 

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