ECB Economic Bulletin, No. 2 - 2018

At its monetary policy meeting on 8 March 2018, the Governing Council concluded that an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up and support headline inflation developments over the medium term.

The information that has become available since the previous monetary policy meeting in January, including the new ECB staff projections, confirmed a strong and broad-based growth momentum in the euro area economy, which is projected to expand in the near term at a somewhat faster pace than previously expected. This outlook for growth confirmed the Governing Council’s confidence that inflation will converge towards the inflation aim of below, but close to, 2% over the medium term.

At the same time, measures of underlying inflation remained subdued and have yet to show convincing signs of a sustained upward trend. In this context, the Governing Council will continue monitoring developments in the exchange rate and financial conditions with regard to their possible implications for the medium-term outlook for price stability.

The continued monetary support required for a sustained return of inflation rates towards levels that are below, but close to, 2% is provided by the ongoing net asset purchases, by the sizeable stock of acquired assets and the forthcoming reinvestments, and by the forward guidance on interest rates.

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