Economic growth in the euro area remains strong and
broad-based, although it has moderated in recent months.
Investment has benefited from benign financing conditions,
steady demand and improved corporate profitability. Employment
gains and expanding household wealth have favoured private
consumption. While global demand has supported euro area
exports, uncertainties, notably related to the danger of
protectionism and the risk of increased market volatility, have
recently weakened net exports.
The inflation outlook has significantly improved, with
adequately anchored longer-term expectations and lower
uncertainties around the future path of inflation. Thanks to
the supportive economic environment and accommodative monetary
policy, underlying inflation is expected to increase towards
the end of 2018 and then gradually rise, maintaining headline
inflation at a level below but close to 2% over the medium
term, in line with the Eurosystem's primary objective.
Against this background, in June 2018 the Governing Council
of the European Central Bank (ECB) took a number of decisions
concerning its standard and non-standard monetary policy
First, the Governing Council decided to maintain the monthly
purchase of assets under the Asset Purchase Programme (APP) at
the pace of €30 billion until the end of September. In
January, the monthly amount of net asset purchases had already
been reduced from €60 billion to €30 billion.
The Governing Council announced that after September it
expected to reduce the monthly pace from €30 billion to
€15 billion until the end of December and that net
purchases will then end.
Second, the ECB Governing Council agreed that the principal
from maturing securities purchased under the APP would continue
to be reinvested well past the end of net asset purchases and
for as long as needed to ensure appropriate liquidity
conditions and an ample degree of monetary accommodation.
Finally, the Governing Council maintained the interest rates
on the main refinancing operations, the marginal lending
facility and the deposit facility unchanged at respectively
0.00%, 0.25% and -0.40%. It also communicated that it expected
to keep the key ECB interest rates at the current level at
least through the summer of 2019, and in any case for as long
as necessary to ensure the continued sustained convergence of
inflation to levels that are below, but close to, 2% over the
At the institutional level, important steps have been taken
to strengthen the Economic and Monetary Union (EMU). Further
risk sharing among Member States requires further risk
reduction, as well as enhanced prevention and correction of
fiscal and macroeconomic imbalances.