Economic development in line with ECB’s June projections

At the recent ECB meeting in June, Draghi argued that 'the monetary policy measures have contributed to a broad-based easing in financial conditions, a recovery in inflation expectations and more favourable borrowing conditions for firms and households'. The lending figures together with the Bank Lending Survey for Q2 confirm that the latter is still in place. 

Also, the ECB will remain satisfied with the recovery in inflation expectations, even though it is modest and was negatively affected by the latest decline in the oil price. Finally, Draghi does not seem to be concerned about the sell-off in fixed income markets, as at the meeting in June he said 'certainly one lesson is that there will be periods of higher volatility.

"Together with the latest activity and inflation data, this should imply that the ECB maintains its view on the economic outlook. This also follows, as the Greek uncertainty has so far not impaired investor and consumer confidence", says Danske bank. 

Based on this, the ECB should continue to conclude, The full implementation of all our monetary policy measures will provide the necessary support to the euro area economy, lead to a sustained return of inflation rates towards levels below, but close to, 2% in the medium term, and underpin the firm anchoring of medium to long-term inflation expectations.