Draghi assures that the ECB has not considered a sudden interruption of its debt purchases, which since January have fallen to 30,000 million per month.
The European Central Bank (ECB) has revised “substantially” upwards its growth forecasts for the euro zone, which will grow by 2.4% in 2017, compared to the 2.2% estimated in September, accelerating its expansion to 2, 3% in 2018, half a percentage point more than previously forecast, according to the president of the institution, Mario Draghi, who has also slightly improved the inflation forecasts, although this will remain below the target of price stability of the entity .
“The ECB has substantially revised up the GDP growth forecasts,” said the Italian banker in his usual appearance before the media after the meeting of the Governing Council of the ECB, which decided to keep interest rates at 0% and not alter the roadmap of the measures of stimulus of the entity, which from the month of January will reduce to half of its purchases of assets, up to 30,000 million euros per month.
Looking to the longer term, the ECB expects that the economy of the euro zone will grow at 2019 at a rate of 1.9%, two tenths above the previous forecast, while it has presented for the first time its projections for 2020, when The central bank is confident that the eurozone will grow 1.7%.
Regarding the risks surrounding these forecasts, Draghi stressed that they are “broadly balanced”, since the strength of the cyclical impulse could lead to positive surprises in the short term, while the downside risks continue to be related to global factors and the evolution of the currency markets.
With regard to the evolution of prices, the ECB’s new projections have been revised upwards to reflect the impact of the evolution of oil and food prices.
In this way, the central bank forecasts that inflation in 2017 will be at 1.5%, in line with the September forecast, while for 2018 it expects a price increase of 1.4%, compared to the previous one, 2%, which in 2019 will be 1.5%, in line with what was previously anticipated, reaching 1.7% in 2020.
However, despite the slight upward revision, inflation forecasts suggest that prices will remain below the ECB’s stability target, which speaks of a lower level, but close to 2%.
“How close?” Draghi questioned, that if the ECB forecasts are fulfilled, he will abandon the presidency in the fall of 2019 without having reached that goal, pointing out that he is questioning whether he expects to raise rates during his term in office. the future would be good news “because it would show that inflation is self-sufficient.
“Our monetary policy decisions have preserved the very favorable conditions that are still necessary for a sustained return of inflation to lower levels, but close to 2%,” said the Italian banker.
In this regard, Draghi reiterated that the ECB has not even discussed the option of a sudden interruption of its asset purchase program, going from 30,000 million monthly to zero, although it has not offered new clues about a potential calendar for the gradual reduction. of the scope of the program.
LOSSES IN THE PURCHASES OF CORPORATE BONDS.
On the other hand, Draghi was asked about the potential losses of the ECB related to the purchases of bonds issued by Steinhoff, a multinational domiciled in the Netherlands and owner of companies such as Conforama or Hertz, whose value has plummeted after the company has recognized errors in their accounts for 2017 and 2016, which will be reformulated.
“We are very transparent with our purchasing program,” said Draghi, noting that it is not unusual for losses to be recorded, although he stressed that in the case of Steinhoff the latent losses are much lower than reported and represent “a small figure “
“As soon as we heard we stopped buying,” Draghi said, adding that the bank could sell or not, so the losses are latent and in any case “they have exaggerated.”
Steinhoff International Holdings has revealed on Thursday that the errors detected in the year 2017 “are also relevant for 2016”, so the company will reformulate its accounts.
At the beginning of December, the supervisory board of the multinational revealed that a series of accounting irregularities related to the “validity and recoverability” of certain items in Steinhoff Europe’s balance sheet for 2017 had been detected, ordering an independent investigation of PwC, After what the then CEO of the company, Markus Jooste, submitted his resignation.
In this sense, the multinational has indicated today that, with the advice of the independent committee of the supervisory board, has formed the opinion that the problems on the validity and recoverability of certain assets in the balance sheet of Steinhoff Europe examined in the audit of 2017 are also relevant for the consolidated financial year of 2016, so the company’s accounts need to be restated.
In this way, Steinhoff International Holdings has recommended to its shareholders and other investors that they be prudent when negotiating with the company’s securities.
Steinhoff shares, which are quoted on the Frankfurt Stock Exchange, lost more than 10% on Thursday, to quote below 0.60 euros, representing the loss of 80% of its value since last December 5, date in which the first irregularities were known.