Eurozone growth continued to be solid and broad-based, though threats such as protectionism remained prominent, the European Central Bank said in the minutes of its latest policy meeting.
“Uncertainties related to global factors remained prominent, in particular with regard to the threat of protectionism and the risk of an escalation of trade tensions,” the minutes, which the ECB calls “account”, of the July 25-26 meeting showed on Thursday.
“These tensions could generate a more general decline in confidence throughout the global economy, beyond any direct effects from the imposition of tariffs.”
Policymakers also expressed concerns about the implications for emerging market economies and the recent depreciation of their currencies.
“The risk of persistent heightened financial market volatility also continued to warrant monitoring,” the minutes said.
ECB policymakers noted that uncertainties surrounding the inflation outlook had been receding.
They also agreed that significant monetary policy stimulus was considered to be still needed to support the further build-up of domestic price pressures and headline inflation over the medium term.
“It was widely felt that monetary policy had to remain patient, prudent and persistent,” the minutes said.
“It was considered essential to retain sufficient flexibility and optionality for monetary policy in the period ahead, and the importance of data dependency in determining the Governing Council’s monetary policy stance was stressed.”
After the July meeting, the ECB Governing Council maintained its interest rates, asset purchases and forward guidance.
In June, the ECB announced that it hopes to halve its monthly bond purchases to EUR 15 billion after September and to end them in December.
Elsewhere on Thursday, ECB policymaker and Bundesbank President Jens Weidmann said it was now time for the ECB to start exiting its ultra-easy monetary policy and the non-standard measures, as euro area inflation is currently consistent with the target.
Weidmann warned against any undue delay in normalizing policy