The European Central Bank released the monthly report on April 12, explaining the bank's actions and moves during the past month, starting with the interest rates, which remained unchanged at 1.0% for the fourth consecutive month as the Governing Council expects inflation to remain above 2.0% in 2012. ECB members didn't discuss rate changes this meeting as well.
The European Central Bank Governing Council kept rates unchanged at 1.00% for the fourth consecutive month in order to support the euro-area economy and as the Bank expects inflation to remain above 2.0% in 2012, accordingly the bank attempts to set the policy to balance growth and inflation at the same time.
The European Central Bank sees that inflation is likely to remain above the target of 2.0% as upside pressures on prices prevail. However, over the medium-term risk to inflation remain broadly balanced, while the ECB has all the tools available against inflation, but still the pressures are to ease and inflation will fall below the target early in 2013.
In regards to growth, the ECB sees that downside risks remain evident on the economic outlook, driven by the narrowed balance sheets; however, the economy will recover gradually this year awaiting the non-standard measures, which are temporary in nature, to start taking positive effect.
The ECB will carefully monitor developments in the euro-area region, where so far the measures provided by the bank helped the stabilization of environment, while economic indicators confirm those signs of stabilization, yet as mentioned earlier downside risks remain evident as the austerity adopted will weigh significantly on growth.
Funding conditions for European banks improved after the second round of Long-Term Refinancing Operations (LTROs), where these operations supported the financial sector to avoid a credit crunch and also spread relief among weak banks. The president called on banks to retain earnings to strengthen their capital, a step that will help in fighting the debt crisis.
The President of the ECB called earlier on Governments, demanding every single nation to implement strong reforms to control the deficit, where European nations must fully meet responsibilities and cut deficits, as the European Central Bank cannot target a single nation with the monetary policy, but the bank is concentrated on the euro area nation as whole.