ECB Delivered Upbeat Economic Outlook
While ECB maintained the main refinancing rate at 1%, the upbeat economic outlook was encouraging. President Trichet said in the statement that there’s ‘strengthening in economic activity in the second quarter of 2010′ while data for the third quarter are ‘better than expected’. The central bank continued to view the current key ECB interest rates remain ‘appropriate’ and ‘the risks to the economic outlook are broadly balanced in an environment of uncertainty’.
ECB’s bullish outlook on the region’s economy boosted market sentiment. At the press conference, Trichet noted that ‘Q2 seems to be really exceptional’. This signals that the GDP in 2Q10 may be stronger than Bundesbank’s prokection of +1.2% q/q made in June 2010.
For the third quarter, Trichet said ‘the available data for the third quarter are better than expected’ and ‘it is clear that the second half is likely to be less buoyant than Q2 which we expect to be particularly flattering’.