ECB: it’s too early to change

European Central Bank (ECB) President Mario Draghi said it is “too early” to assess the impact of the recent agreement between Europe and the United States over trade. But that in any case it is a “good sign.”

That means a base deposit rate of -0.4%, and a quantitative easing program of €30 billion per month — a figure that will be reduced to 15 billion euros per month from September as the bank winds down its bond buying. The ECB will cease purchasing bonds from the end of 2018.

The bank continued, however, to hint that an interest-rate hike could be on the way in the next year or so.

“The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019,” it said in a statement, adding “in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term.”

This assessment was corroborated by President Mario Draghi during a press conference after the decision, in which he had a positive view of the eurozone economy.

“While uncertainties, notably related to the global trade environment, remain prominent, the information available since our last monetary policy meeting indicates that the euro area economy is proceeding along a solid and broad-based growth path,” he told reporters at the ECB’s Frankfurt headquarters.

The meeting was always expected to be uneventful, with economists unanimous in their beliefs that policy would be unchanged. July’s meeting is the last before the central bank’s extended summer break, and is traditionally lacking in any significant action.

Draghi told reporters that the ECB “took note” of the deal. “It’s too early to assess the actual content,” he said.

“It is a good sign, because in a sense it shows that there is a willingness to discuss trade issues in a multilateral framework again,” the central banker said.

Draghi had warned in March — when Trump threatened to impose metal tariffs on Europe — that “unilateral decisions are dangerous.”

“What strikes me is whatever convictions you have about trade, we are convinced that disputes should be discussed and resolved in multilateral framework,” Draghi said at the time.

“As expected, today’s meeting yielded little new information with regards to the policy outlook following last month’s forward guidance update,” Andrew Wilson, CEO of Goldman Sachs Asset Management Europe, said in an email.

The euro was little moved on the decision, reflecting the fact that it was in line with market expectations.