- Mario Draghi, ECB President
ECB President Mario Draghi responded to critics from German Finance Minister Wolfgang Schauble that negative interest rates hurt savers and weighing on the banking sector. Draghi said that low interest rates are not harmless but they are only the symptom, not the cause of an underlying problem, adding that there was no alternative for now.
Meanwhile, the Euro zone's manufacturing sector expanded in April, recording a marginal improvement from the March reading. The manufacturing PMI in the Euro bloc ticked up to 51.7 points in the reported month, up from 51.6 points and compared with the preliminary reading of 51.5, according to Markit. Factory activity in the Euro area's powerhouse, Germany, revealed a fresh upside trend in April. Germany's final manufacturing PMI increased to 51.8 points during April, advancing from the previous final March reading of 50.7. Last week's GDP data showed 0.6% growth of the Euro zone's economy in the first quarter of 2016, compared with last quarter's 0.3%. On an annual basis the economy expanded 1.6%, in line with the previous number and beating the 1.4% estimate. Despite positive GDP numbers, Euro zone policy makers should be alert, as the CPI estimates showed the single currency area sliding further into deflation territory, as the estimated CPI dropped from -0.1% to -0.2% on an annual basis.
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