The European Central Bank will “probably” downgrade its growth forecasts soon, a senior official said Friday, a day after the Frankfurt institution warned that economic risks to the euro area had worsened.
“The near-term growth will probably be reduced in our forecast published in March,” Bank of France governor Francois Villeroy de Galhau told Bloomberg TV from the World Economic Forum in Davos.
ECB chief Mario Draghi on Thursday said risks to the eurozone “have moved to the downside” as mounting protectionism, sluggish Chinese growth and Brexit uncertainty weigh on the region’s outlook.
The ECB is due to unveil its latest quarterly projections for growth and inflation on March 7, following a meeting of the governing council.
In December, the bank said it expected the eurozone economy to expand by 1.7 percent in 2019.
Draghi stressed that the ECB still had tools left to support the euro area, even after the bank ended a major bond-buying stimulus scheme last month.
Many economists have interpreted Draghi’s dovish stance as a sign that interest rates will be kept unchanged at record lows well beyond the ECB’s current horizon of “at least through the summer of 2019”.
ECB executive board member Benoit Coeure, also speaking to Bloomberg at the glitzy Swiss gathering, said the eurozone’s current slowdown “has surprised us”.
But he cautioned that it was “too early” to say whether the weaker momentum justified delaying possible rate hikes.
“We’re saying we’re not going to move before through the summer. We could change it, we could extend it,” Coeure added.
Both Coeure and governing council member Villeroy de Galhau are considered candidates to replace outgoing ECB president Draghi, whose term ends in October, and any comments they make about monetary policy are closely followed by markets.
Asked by Bloomberg whether he would like to run the ECB, Coeure replied: “Who wouldn’t?”
Fellow Frenchman Villeroy de Galhau was more coy. “It’s not up to us, it’s up to political leaders, which is very good in democracies”.
Under EU rules, the ECB president is appointed by the European Council.
An announcement is expected around the middle of the year.