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ECB Draghi cuts growth forecasts, warns of protectionism

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European Central Bank President Mario Draghi started by the press conference by revealing that the Governing Council has carefully assessed the progress of the asset purchases program and the inflation path.

The ECB judged that there has been significant improvement in inflation towards a sustained adjustment to the ECB’s 2 percent goal.

He confirmed that the ECB would run the QE program at 30 billion euros per month until September, then it will be tapered to 15 billion euros, noting that it will end in December.

Regarding interest rates, he noted that it will remain at its record low until at least the summer of 2019.

However, Draghi stressed that the ECB was ready to change its monetary trajectory to make sure that inflation was heading to its objective.

Draghi said that growth in the euro area is strong and that was affected by temporary factors such as weaker trade with the rest of the world.

But the ECB slashed its growth estimates to 2.1 percent this year, down from 2.4 percent predicted in three months ago.

The global risks have risen in recent months, and points to rising protectionism, Draghi mentioned justifying the ECB’s downgrade to its growth outlook.

On the other hand, the ECB has raised its inflation forecasts for this year and next, as it now predicts a rate of 1.7 percent in 2018 and 2019, up from previous forecasts of 1.4 percent.

Draghi explained that the upside revision in the inflation forecasts was largely due to the soar in oil prices.

Finally, Draghi reiterated that European governments must step up structural reforms and called eurozone countries to rebuild their “fiscal buffers”.

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