The main theme of this evening’s meeting is the European Union’s low-interest loan program, which is expected to begin in September. According to the decision today, the banks’ interest rates will be 10 basis points above the MRO rate (the interest paid by European banks on short-term loans in case of emergency).
The bank’s governor, Mario Draghi, is announcing at the press conference an update of the bank’s growth and inflation forecasts. The bank now expects 1.1% growth in 2019 from a previous forecast of 1.2% growth. In 2020 and 2021, the bank expects 1.4% and 1.4% growth, respectively, compared to the previous forecast of 1.6% and 1.5% growth.
With regard to inflation, the Bank now expects inflation of 1.3% in 2019, compared with a previous forecast of inflation of 1.2%. In 2020 and 2021 the Bank expects inflation of 1.4% and 1.6%, respectively, compared to a previous forecast of inflation of 1.5% and 1.6%.
Draghi claims that the bank is closely monitoring the need to use easy monetary tools, but argues that the bank is prepared to make changes in all the tools if necessary. Draghi even hinted to the acquisitions program when he claimed during the press conference that “a number of members of the bank committee raised the possibility of lowering interest rates and launching a purchase plan”