The European Central Bank (ECB) announced its monetary policy decision last Thursday. As expected, it left interest rates unchanged and made no significant changes to its policy statement, amid signs of an apparent softening in the eurozone’s growth outlook.
The ECB’s interest rate on its main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at zero, 0.25 and -0.40 per cent respectively.
Speaking in Frankfurt, ECB president Mario Draghi said “underlying strength” in the eurozone’s economy continued to support the bank’s confidence despite signs of “moderation” in recent weeks.
Meanwhile, survey data from the Munich-based Ifo Institute showed that German business confidence deteriorated the most in almost a year in April, keeping Europe’s largest economy on an uncertain footing after a weak first quarter.
The German business sentiment index fell to 102.1 from 103.3 a month ago. This was the lowest reading since March 2017, when the reading was 101.3. The score was forecast to drop moderately to 102.8.
Business climate weakened across all sectors except construction, where it hit a record high. In manufacturing, the business climate deteriorated for the third consecutive month.
The data follow multiple reports that indicate that momentum in the eurozone is waning. The figures come at an awkward time for the ECB, which is preparing to trim back stimulus later this year.
Finally, in the United States, sales of homes rose for a second consecutive month in March amid a rebound in activity in the northeast and midwest regions. However, a shortage of houses on the market and higher prices remain headwinds as the spring selling season starts.
The National Association of Realtors (NAR) reported last week that existing home sales rose 1.1 per cent to a seasonally adjusted annual rate of 5.60 million units last month.
The market for existing homes accounts for about 90 per cent of US home sales. The supply squeeze is expected to ease somewhat later this year as recent data showed the stock of housing under construction rising in March to levels last seen in July 2007.
There is an acute shortage of homes, especially at the lower end of the market. According to the NAR, sales of houses priced below $100,000 dropped by 21 per cent in March from a year ago.
This report was compiled by Bank of Valletta for general information purposes only.