With important elections due in France, the ECB leaves its monetary policy unchanged for euro-using nations

April 27, 2017 – NY Times

With crucial elections approaching in France, the European Central Bank opted on Thursday against rocking the boat, leaving its monetary policy unchanged for the 19 nations using the euro.

But for analysts and investors — who parse every word spoken by Mario Draghi, the president of the bank, alert to even subtle changes in language or tone — there was plenty to focus on.

The upshot on Thursday was that the central bank’s Governing Council has become more optimistic about the eurozone economy, moving ever so cautiously toward the day when it will begin withdrawing its stimulus measures and, eventually, raise interest rates.

The euro rose as much as 0.6 percent against the dollar shortly after Mr. Draghi started speaking, but it has since given up most of those gains.

The European Central Bank repeated its promise to keep buying government and corporate bonds — a form of economic stimulus — until the end of the year, “or beyond, if necessary.”

Observers of the central bank are obsessing about when in 2018 the bank might begin to wind down, or taper, those bond purchases. A few subtle changes in the language used by Mr. Draghi signaled that the central bank is laying the groundwork for tapering, but that it is still on the distant horizon.

After every meeting, the central bank’s Governing Council issues a statement giving its view on the state of the economy in the eurozone.

The previous statement, in March, was slightly more bullish than those in earlier months. Thursday’s update continued the trend toward more optimism. Mr. Draghi described the eurozone economy as “increasingly solid” and said “downside risks have further diminished.”

But the change in tone was not so significant that it caused most analysts to recalibrate their forecasts of when tapering might begin.