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| Version 3 | Version 4 |
|---|---|
| ECB set to 're-examine' stimulus policy at next meeting | ECB set to 're-examine' stimulus policy at next meeting |
| (about 1 hour later) | |
| The European Central Bank (ECB) says it will "re-examine" its €1.1 trillion quantitative easing (QE) stimulus programme at its December meeting. | The European Central Bank (ECB) says it will "re-examine" its €1.1 trillion quantitative easing (QE) stimulus programme at its December meeting. |
| It has embarked on a scheme of bond purchases at €60bn per month designed to bring eurozone inflation back up. | It has embarked on a scheme of bond purchases at €60bn per month designed to bring eurozone inflation back up. |
| But consumer prices fell by 0.1% in the euro area in September, prompting speculation there may be changes to the bank's QE policy. | But consumer prices fell by 0.1% in the euro area in September, prompting speculation there may be changes to the bank's QE policy. |
| The comments came as the bank left its key interest rate unchanged at 0.05%. | The comments came as the bank left its key interest rate unchanged at 0.05%. |
| 'Monetary policy accommodation' | 'Monetary policy accommodation' |
| "The asset-purchase plans are proceeding smoothly and continue to have a favourable impact," bank head Mario Draghi told a news conference in Malta. | |
| "The degree of monetary policy accommodation will need to be re-examined at our December meeting." | "The degree of monetary policy accommodation will need to be re-examined at our December meeting." |
| The decision to leave the cost of borrowing unchanged was widely expected after the ECB cut rates to rock-bottom levels more than a year ago. | The decision to leave the cost of borrowing unchanged was widely expected after the ECB cut rates to rock-bottom levels more than a year ago. |
| It kept the rate on bank overnight deposits at -0.2%, which means banks pay to keep funds at the central bank. | It kept the rate on bank overnight deposits at -0.2%, which means banks pay to keep funds at the central bank. |
| The ECB also held its marginal lending facility - or emergency overnight borrowing rate for banks - at 0.3%. | The ECB also held its marginal lending facility - or emergency overnight borrowing rate for banks - at 0.3%. |
| Inflation expectations | Inflation expectations |
| Mr Draghi added that the bank's governing council had taken part in "a very rich discussion" on a number of areas of monetary policy, including a potential further cut in the rate charged to banks to leave money on deposit at the central bank. | Mr Draghi added that the bank's governing council had taken part in "a very rich discussion" on a number of areas of monetary policy, including a potential further cut in the rate charged to banks to leave money on deposit at the central bank. |
| Meanwhile, Howard Archer, chief European and UK economist at IHS Global Insight, said the ECB also seemed to have indicated that it was open to a "whole menu" of monetary policy instruments. | |
| "Significantly, interest rate cuts now appear to be back on the table, having seemingly been off the agenda since September 2014," he added. | |
| Analysis: Andrew Walker, BBC economics correspondent | |
| This is what Mario Draghi did NOT say: "we will open the QE taps wider". | |
| But there was a very clear hint that the ECB is preparing to expand the programme as soon as December. The factors keeping inflation so far below the 2% target require "thorough analysis" he said. | |
| The degree of monetary policy accommodation - that's QE - "will need to re-examined" at the December meeting. | |
| International developments and financial markets "continue to signal downside risks to the outlook for growth and inflation". None of this completely boxes the ECB in. | |
| If the situation improves sufficiently in the meantime, they could still hold fire. But the odds have moved a bit further towards expanded QE in December. A sure sign that the eurozone's economic recovery remains decidedly lacklustre. | |
| Mr Draghi also said that the eurozone inflation rate was set to remain very low in the near-term. | |
| "Since our last meeting, short-term inflation expectations have declined but more medium to long-term inflation expectations, after some decline following our last meeting, have now recovered and are basically unchanged since then," he said. | "Since our last meeting, short-term inflation expectations have declined but more medium to long-term inflation expectations, after some decline following our last meeting, have now recovered and are basically unchanged since then," he said. |
| After his comments, European bond yields and the euro fell. | After his comments, European bond yields and the euro fell. |
| German 10-year bond yields fell 5 basis points to 0.53%, and euro fell to a three-week low of $1.1226 against the US dollar, down 1% on the day. | German 10-year bond yields fell 5 basis points to 0.53%, and euro fell to a three-week low of $1.1226 against the US dollar, down 1% on the day. |