The euro area’s growth outlook remains modest, even as the European Central Bank signals room for a softer trajectory in its next assessments. When the ECB issued its June projections, it opened the door to revising those forecasts downward, while noting that incoming data in mid-September could shift the balance once again. The central bank also warned that certain indicators suggest activity in the currency union might not be on a clear path to recession, even if downside risks linger. German authorities echoed this sentiment on Thursday, and Elizabeth Schnabel, a top ECB executive, reiterated that monetary policy must stay sufficiently restrictive to bring inflation back to the 2 percent target over the medium term.
