At its monetary policy meeting last Thursday, the European Central Bank (ECB) kept its asset purchase programme unchanged and interest rates at record lows while leaving the door open to increase asset purchases if the economic outlook deteriorated.
ECB president Mario Draghi said that the bank needs “persistence” and “patience in keeping the current stimulus in place” in order to push inflation toward its goal of just under two per cent.
The bank also retained its asset purchase programme of €60 billion a month through year end, and longer, if necessary. Policymakers have been cautious about signalling any gradual withdrawal of the stimulus or tapering from the bond purchase programme.
In the meantime, the EU’s statistics agency Eurostat said that the eurozone’s housing market held steady above its nine-year high in the first three months of the year. House prices in the three months through March climbed four per cent, the same rate of increase seen in the fourth quarter, which was revised down marginally from a 4.1 per cent reported previously.
The latest house-price inflation reading is still the highest reading recorded since the third quarter of 2007, when house prices rose to 4.1 per cent. Quarter-on-quarter, house price growth slowed to 0.4 per cent in the first quarter of 2017 from 0.7 per cent in the fourth quarter of 2016. In the EU as a whole, house prices rose by 4.5 per cent year-on-year and grew by 0.7 per cent from the fourth quarter.
Finally, a report released by the Commerce Department showed that housing starts in the United States rebounded by more than expected in June following an unexpected decline in new residential construction in May. Housing starts rose by 8.3 per cent to a seasonally-adjusted annual rate of 1.22 million from May’s upwardly revised 1.12 million, and 2.1 per cent higher than June 2016.
The higher than expected rise in housing starts was partly due to a surge in multi-family home starts, which spiked by 13.3 per cent to a rate of 366,000 in June from 323,000 in May.
This report was compiled by Bank of Valletta for general information purposes only.