ECB Officials Are Said to Agree Slowdown Hasn’t Worsened

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European Central Bank policy makers agree that euro-zone economic growth has held up in line with their official forecasts despite recent weak data, according to people with knowledge of the matter.

While some Governing Council members meeting on Wednesday remained skeptical over the prospects of a pickup in the second half, the data are mixed and there was consensus that the slowdown hasn’t been worse than anticipated, said the people, who asked not to be identified because such discussions are confidential. An ECB spokesman declined to comment.

That analysis suggests the central bank may need to see a further deterioration in the euro area’s growth performance before any downgrade in its forecasts can be justified. That’s key because President Mario Draghi said on Wednesday that the forthcoming outlook will help determine how stimulative the ECB’s bank-loan program should be. The next predictions will be unveiled in June.

Policy makers often wait for their quarterly forecasting rounds before delivering major monetary decisions. The most recent outlook, in March, anticipated growth of 1.1 percent this year and 1.6 percent in 2020.

The quarterly survey of professional forecasters released by the ECB on Thursday painted a downbeat picture of economic outlook for the 19-nation region. Forecasters cut their predictions for 2019 and 2020 growth and also lowered estimates for inflation. The potential impact of a hard Brexit was the most cited downside risk, according to the report. European Union leaders agreed overnight to delay the deadline for Britain’s departure from the bloc until the end of October.

“The information that has become available since the last Governing Council meeting in early March confirms slower growth momentum extending into the current year,” Draghi told reporters in Frankfurt. “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.”

Draghi also reiterated his previous comments that the ECB might need to soften the impact of its negative interest rates. Governors exchanged views on the effects of the policy at their meeting but without settling on a position, the people said.

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