Eurozone economic confidence improves on ECB stimulus

Madrid - Eurozone economic confidence rose for a second month in May as the European Central Bank (ECB) prepares to present updated economic projections that could provide further clues about the impact of its stimulus program.

An index of executive and consumer sentiment increased to 104.7 from a revised 104.0 in April, the European Commission in Brussels said on Monday. That’s the highest level in four months and compares to a median estimate for an increase to 104.4 in a Bloomberg News survey of economists.

ECB officials meeting in Vienna on Thursday are expected to keep their ultra-loose policy unchanged again after they expanded quantitative easing by a third to €80bn in March and cut the deposit rate further below zero. Vice President Vitor Constancio said last week that he’s optimistic the ECB will reach its inflation goal by 2018, reflecting the upgraded stimulus and rising oil prices.

Sentiment among consumers rose to minus 7.0 from minus 9.3 the previous month, the report showed. Confidence in retailing and construction improved as well, while a measure for industry remained unchanged and a gauge for services declined.

In March, the ECB forecast eurozone growth of 1.4% this year, 1.7% in 2017 and 1.8% in 2018, with inflation of 0.1%, 1.3% and 1.6%, respectively. Asked in a Bloomberg Television interview whether he thinks consumer prices will rise faster in two years than currently predicted, Constancio said he “certainly personally expects” so.