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ECB Press Conference

Written by A Forex View From Afar on Thursday, March 06, 2008

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•Strong near-term Inflationary pressure still remain.

•The anchoring of Inflation expectations are the main priority of the ECB, maintaining a stance of monitoring second round Inflationary effects.

•The economy has moderating growth, the last Quarter over Quarter GDP growth in 2007 was 0.4%, down from the 0.7% forecast. Consumption growth will continue in the Euro region. GDP growth between 1.3-2.3%, the 2008 outlook has been lowered since December. International outlook confirms a Global slow-down.

•Looking forward, Domestic and Overseas demand supports GDP growth, lower than 2007, but the Fundamentals are sound, with no imbalances.

•Investment growth, profitability, and Employment have all stayed strong.

•Downside risks exist, but mainly from the Credit Crisis, and Commodity prices.

•The fear of Global imbalances may affect the growth numbers.

•Strong upwards pressure from Inflationary food and Energy prices, lead the ECB to continue looking for continued price stability pressure.

•Wage Inflation may impact the ECB’s outlook on second round risks to price stability.

•It is key that all Euro-Zone participants monitor wage negotiations, linking wages to CPI is to be avoided.

•The upside risks to Price stability remain strong, and Money Supply M3 growth is very strong.

•Household borrowing has pulled back in-line with ECB rate increases. Non-financial lending grew by 14.6% yearly.

•Little evidence that the August 2007 Credit Crisis has not lead to substantial shift in financial portfolios.

•Strong loan growth suggests that the supply of credit has not been impacted so far, as a consequence of the Credit Crisis.

•The Economic and Monetary analysis confirms upside risks to Inflation, with moderating GDP growth. The anchoring of long-term Inflationary pressures, and price stability are the key parts of the ECB’s work.

TheLFB: ECB Press Conference Bullet Points

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