ECB Economic Bulletin, No. 3 - 2019

The information that has become available since the Governing Council's monetary policy meeting in March confirms slower growth momentum extending into the current year. While there are signs that some of the idiosyncratic domestic factors dampening growth are fading, global headwinds continue to weigh on euro area growth developments. The risks surrounding the euro area growth outlook remain tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets. At the same time, further employment gains and rising wages continue to underpin the resilience of the domestic economy and gradually rising inflation pressures. However, an ample degree of monetary accommodation remains necessary to safeguard favourable financing conditions and support the economic expansion, and thus to ensure that inflation remains on a sustained path towards levels that are below, but close to, 2% over the medium term. Significant monetary policy stimulus is being provided by the Governing Council's forward guidance on the key ECB interest rates, reinforced by the reinvestments of the sizeable stock of acquired assets and the new series of targeted longer-term refinancing operations (TLTROs).

Survey indicators of global economic activity have weakened in the first quarter of 2019. In particular, global trade has continued to slow down amid the turning of the global industrial cycle and heightened trade tensions. Global inflation has subsided in the first months of this year, largely on account of a lower contribution from the energy component. [...]

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