Euro-area economic confidence rose for a second month in May as the ECB updated economic projections that could provide clues to the extent of the success of its stimulus program.
According to the European Commission in Brussels, the index of executive and consumer sentiment showed an increase to 104.7 from a revised 104.0 in April, the highest level in four months.
ECB officials will be meeting in Vienna on Thursday and are expected to keep unchanged the current lenient policy after having expanded their quantitative easing by a third to 80 billion euros ($89 billion) in March and cut the deposit rate further below zero.
ECB Confident
ECB Vice President Vitor Constancio said last week that taking into account the upgraded stimulus and rising oil prices he is optimistic the ECB will reach its inflation goal by 2018.
Consumer sentiment rose to minus 7.0 from minus 9.3 the previous month according to Monday’s report and confidence in retailing and construction improved as well.
The ECB forecast last March that euro-area growth would reach 1.4 percent this year, 1.7 percent in 2017 and 1.8 percent in 2018, with inflation of 0.1 percent, 1.3 percent and 1.6 percent, respectively. Constancio “expects” that prices will rise faster in two years than currently predicted.
According to Johannes Gareis, an economist at Natixis in Frankfurt, “We expect both the inflation and growth projections to be revised upward; that’s going to be the focus in this week’s meeting. The ECB will stress the importance of QE now that you can actually see some positive effects in the data.”
The ECB Governing Council meets June 2 to presents updated forecasts.