ECB Monthly Report: Heightened geopolitical risks may affect economic conditions negatively

By FXstreet.com | Updated August 14, 2014 AAA

FXStreet (Łódź) - The ECB Monthly Report for August reiterates the information from the central bank's last monetary policy meeting, during which no adjustments were made and president Mario Draghi signaled the intention to wait for the impact of measures implemented in June to become evident.

The report stated that the economic recovery in the Eurozone continues at a moderate pace and that "inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with the Governing Council’s aim of maintaining inflation rates below, but close to, 2%." The TLTROs, which will come into effect in September, should "enhance the accommodative monetary policy stance," while the Governing Council is stepping up work on the asset purchase program.

The report also pointed to heightened downside risks to the Eurozone economy stemming from the recent intensification of geopolitical tensions, developments in EM economies and in global financial markets.

According to ECB's professional forecasters Eurozone GDP should expand by 1% this year, by 1.5% in 2015 and by 1.7% in 2016. As far as inflation is concerned it should rise by 0.7% this year, by 1.2% the next and accelerate to 1.5% in 2016.

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