Draghi speech indicates that recent slowdown matters much and APP end will be moved to 2019

• The ECB left policy rates unchanged in line with expectations
• The ECB also left the forward guidance on its asset purchasing program unchanged saying it will end this September, or beyond, if necessary.
• Given the emphasis on the recent slowdown of forward-looking indicators and it implication of growth and inflation prospects, I assume asset purchasing to be prolonged to Q1 2019.

The ECB was widely expected to leave the monetary policy instrument at the unchanged level in April so the focus of the market focus quickly shifted to what is the most likely path of the ECB asset purchasing program.The ECB opted for no change in the forward guidance for asset purchasing and openly admitted that the Governing Council was not discussing the road map of exiting the policy because it needed to understand current slowdown in the forward-looking indicators were broadly analyzed on the individual country basis.

While the ECB is leaving the interest rates at present levels for an extended period of time and "well past" the end of the net asset purchases, given the recent uncertainty and the broadness of discussion about the recent slowdown in the economic activity, it is likely that the asset purchasing program will continue for some time and its expiry will be prolonged for six months.  That is also a perfect timing in sense of the end of Draghi’s tenure with the ECB that should end in October 2019.

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Draghi confirmed that all Eurozone member countries experienced some loss of momentum that is broad across countries and across sectors, but the ECB analyzed the slowdown in context of indicators slowing down from multi years highs still standing above their historical averages and still point to a strong economic growth. Draghi also admitted that some of the temporary factors also contributed to the slowdown including the timing of Easter this year or/and adverse weather conditions in some countries.

The recent rise in protectionism was not particularly commented by Draghi, who considers the effects possible risk to growth and eventually also to the inflation outlook but refrained from materializing. 

ECB action timeline