European Troubles

This week the ECB convened to decide any rate change. The meeting comes around two months after it shut down its 2.6 trillion Euro bond-buying programme, which was aimed at instigating economic growth and curbing off the threat of low inflation in the eurozone. This unfortunately has not stopped core inflation dropping so far this year and combined with a run of poor data it has led the ECB to cut its inflation and economic projections for 2019.
Draghi had expressed during the press conference at Frankfurt that, “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.” He then went on to say, “The risks surrounding the euro area growth outlook are still tilted to the downside.”
Rates will remain at record low levels, but it has not stopped them to go back to a monetary stimulus solution via loans to commercial banks to help with the continued low interest rates. The problem that many have already raised since then is what other back up does the ECB have if matters progressively decline. As quoted above, the “geopolitical instability” or Brexit and the Chinese economic slowdown, (which can be argued was a direct consequence of the trade war with the US), is an obvious factor to the current and future turbulence on the European economy.
The Euro had plunged below 1.1200 before slight retracement and holding at the 1.12200.

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