Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

ECB slashes eurozone growth forecasts, interest rates to remain unchanged in 2019

The European Central Bank announced that it will launch a fresh round of stimulus and pledged to keep interest rates at record lows throughout 2019 after cutting its growth forecast for the eurozone.

European Central Bank (ECB) Source: Bloomberg

The European Central Bank (ECB) slashed the eurozone’s economic growth forecast for 2019 from 1.7% to 1.1% on Thursday.

To counteract the bloc’s ailing economy, the ECB pledged to keep interest rates at record lows ‘at least through 2019’ and unveiled plans to launch a new round of stimulus.

‘For one of the first times in its short life, the ECB has been pre-emptive rather than reactive,’ Senior Global Investment Strategist at Principal Global Investors Seema Shah said.

‘By announcing new liquidity operations earlier than the market was anticipating, the ECB has moved ahead of the curve and provided strong reassurance to the banking sector - and to the real economy to some extent - that it will provide support if required.

‘Admittedly, these TLTROs [targeted longer-term refinancing operations] themselves are unlikely to provide strong stimulus but demonstrating its intent to act is half the job done,’ she said.

Eurozone bonds rally, sending yields lower after ECB meeting

The market anticipated the ECB to leave interest rates unchanged on Thursday, but investors were clearly surprised by the central bank’s decision to introduce a fresh round of stimulus, reflected by a eurozone bonds rallying, sending yields lower.

Italy’s yield on its short-term paper fell to its lowest level since May last year, sliding 14 basis points to 0.128%, while the longer-term German 10-year Bund fell 12 basis points to 2.492% on Thursday following the ECB’s meeting.

‘At this stage it is about as far as the ECB will go towards admitting that the European economy faces some serious headwinds in the months ahead,’ Aberdeen Standard Investments senior economist Paul Diggle said.

‘Markets are going to cheer the response with the euro selling off and bond yields and equity markets rallying,’ he added.

Euro loses ground against the dollar

The bank’s decision to downgrade its economic growth forecast for the eurozone also hurt the euro, with it falling by as much as 0.4% against the dollar to $1.1260.

‘Today’s monetary policy decisions were taken to ensure that inflation remains on a sustained path toward levels that are below, but close to, 2 percent over the medium term,’ ECB President Mario Draghi said after the policy meeting on Thursday.

’The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment.’


The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

See your opportunity ?

Seize it now. Trade over 17 000 markets on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.