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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/oct/26/brexit-fears-uk-car-industry-european-central-bank-qe-stimulus-draghi-business-live
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| Euro falls as ECB halve stimulus programme to €30bn per month - business live | |
| (35 minutes later) | |
| 3.14pm BST | |
| 15:14 | |
| Euro hits three-week low | |
| Mario Draghi has done a good job of talking down the euro too. | |
| The single currency has now shed one cent against the US dollar to $1.172, a three-week low. | |
| Traders have clearly got the message that the ECB’s bond-buying programme remains ‘open-ended’, and that it has not intention of raising interest rates any time soon. | |
| #Euro extends losses following #ECB meeting. pic.twitter.com/WxOAOWKutK | |
| 3.01pm BST | |
| 15:01 | |
| Draghi's press conference: The key points | |
| That was a pretty dovish performance from Mario Draghi. An effective performance too, as the ECB president makes it clear that he expects maintain loose monetary policy for some time, despite the economic recovery. | |
| Here are the key points: | |
| 1) The European Central Bank has halved the pace of its bond-buying asset purchase programme. From January, it will only buy €30bn of government and corporate bonds each month, down from €60bn, for at least the next nine months. | |
| 2) But..... this doesn’t mean that the ECB’s QE programme is on borrowed time. President Draghi has insisted that today’s decision is not ‘tapering’, meaning the Bank expects to keep buying bonds beyond September 2018. | |
| This was perhaps the key quote: | |
| The decision today is for an open-ended programme ... it’s not going to stop suddenly. The large majority of the Governing Council expresses a preference for keeping it open-ended. | |
| There is still a large amount of uncertainty, so it was only prudent. | |
| So while the ECB has taken a step towards ending its ultra-loose monetary stance, we’re not there yet.... | |
| #ECB Draghi presser ends as it has begun: w/ dovish tone. Says reduction in monthly purchases is not tapering. | |
| 3) Draghi was upbeat about the recovery in the eurozone recovery, pointing out (twice) that seven million jobs have been created in the last four years. | |
| He declared that: | |
| “The latest data and survey results point to unabated growth momentum in the second half of this year.” | |
| Today’s governing council was held in a positive atmosphere, he added. | |
| All the members mentioned growth momentum, improving employment ...investment is actually picking up. The earning capacity of households is picking up, so disposable income is increasing. | |
| 4) But the ECB still sees ‘muted’ inflation pressures. That’s why it intends to keep pumping euros into the economy through its asset purchase scheme. | |
| “Domestic price pressures are still muted overall and theeconomic outlook and the path of inflation remain conditional oncontinued support from monetary policy. Therefore, an ampledegree of monetary stimulus remains necessary.” | |
| 5) On geopolitics, Draghi said the ECB was watching developments in Catalonia very closely. | |
| “It is very difficult to comment on developments that change every day. We are following what is happening ... to conclude now that there will be instability is premature.” | |
| 2.35pm BST | 2.35pm BST |
| 14:35 | 14:35 |
| Q: Last year, when the ECB cut QE from €80bn to €60bn per month, you insisted that you weren’t ‘tapering’ your bond buying programme. So is today’s announcement tapering? | Q: Last year, when the ECB cut QE from €80bn to €60bn per month, you insisted that you weren’t ‘tapering’ your bond buying programme. So is today’s announcement tapering? |
| No, Draghi replies. That underlines how the programme is likely to keep running beyond next September (but possibly at a lower rate than €30bn per month). | No, Draghi replies. That underlines how the programme is likely to keep running beyond next September (but possibly at a lower rate than €30bn per month). |
| And that’s the end of the press conference. | And that’s the end of the press conference. |
| 2.30pm BST | 2.30pm BST |
| 14:30 | 14:30 |
| Draghi’s insistence that QE is ‘open-ended’ is fuelling speculation that the ECB could keep buying government bonds until 2019. | Draghi’s insistence that QE is ‘open-ended’ is fuelling speculation that the ECB could keep buying government bonds until 2019. |
| And that would mean interest rates could remain at their current record lows until 2020! | And that would mean interest rates could remain at their current record lows until 2020! |
| The chances of #Draghi leaving the #ECB (=> October 2019) without hiking rates once have gone up dramatically today. | The chances of #Draghi leaving the #ECB (=> October 2019) without hiking rates once have gone up dramatically today. |
| #Draghi: QE is not going to stop suddenly =>net asset purchases will go on beyond September 2018 => first rate hike Q2 2019 at the earliest? | #Draghi: QE is not going to stop suddenly =>net asset purchases will go on beyond September 2018 => first rate hike Q2 2019 at the earliest? |
| 2.27pm BST | 2.27pm BST |
| 14:27 | 14:27 |
| Q: If the eurozone recovery turns out to be stronger than you expect, might you reduce the pace of the asset purchase scheme? | Q: If the eurozone recovery turns out to be stronger than you expect, might you reduce the pace of the asset purchase scheme? |
| This is today’s decision, Draghi shoots back, adding “This is our commitment, we don’t foresee changes now.” | This is today’s decision, Draghi shoots back, adding “This is our commitment, we don’t foresee changes now.” |
| Q: what about if economy becomes more favorable?Draghi: this is today's decision. | Q: what about if economy becomes more favorable?Draghi: this is today's decision. |
| 2.24pm BST | 2.24pm BST |
| 14:24 | 14:24 |
| Q: The US Federal Reserve raised interest rates 15 months after ending its bond-purchase programme - might the ECB take a similar approach? | Q: The US Federal Reserve raised interest rates 15 months after ending its bond-purchase programme - might the ECB take a similar approach? |
| We don’t have a fixed timeframe, Draghi replies. Comparisons with other jurisdictions aren’t really appropriate. | We don’t have a fixed timeframe, Draghi replies. Comparisons with other jurisdictions aren’t really appropriate. |
| 2.21pm BST | 2.21pm BST |
| 14:21 | 14:21 |
| Q: What might happen to the ECB’s stimulus programme after September 2018? | Q: What might happen to the ECB’s stimulus programme after September 2018? |
| Mario Draghi says the programme is “open-ended”, meaning it won’t suddenly stop buying bonds next October. | Mario Draghi says the programme is “open-ended”, meaning it won’t suddenly stop buying bonds next October. |
| That will probably reassure the markets, who have developed a taste for very loose monetary policy and don’t want the ECB’s punch bowl to run dry. | That will probably reassure the markets, who have developed a taste for very loose monetary policy and don’t want the ECB’s punch bowl to run dry. |
| Draghi says the magic word: QE is still "open ended." And when and if it ends, "it's not going to stop suddenly" | Draghi says the magic word: QE is still "open ended." And when and if it ends, "it's not going to stop suddenly" |
| #Draghi's significant statement: also in September 2018 the program will not end abruptly, so he says the purchases will continue after then | #Draghi's significant statement: also in September 2018 the program will not end abruptly, so he says the purchases will continue after then |
| 2.18pm BST | 2.18pm BST |
| 14:18 | 14:18 |
| Draghi: We're watching Catalonia independence very closely | Draghi: We're watching Catalonia independence very closely |
| Q: Is political uncertainty in Catalonia a risk to financial stability in Spain, and in the euro area at a whole? | Q: Is political uncertainty in Catalonia a risk to financial stability in Spain, and in the euro area at a whole? |
| Mario Draghi says the ECB is following developments with “great attention”, but it is “very difficult to comment on developments that change every day”. | Mario Draghi says the ECB is following developments with “great attention”, but it is “very difficult to comment on developments that change every day”. |
| To conclude now that there will be financial stability risks would be premature. We have to see what will happen.... | To conclude now that there will be financial stability risks would be premature. We have to see what will happen.... |
| 2.15pm BST | 2.15pm BST |
| 14:15 | 14:15 |
| Q: Why has the ECB decided to keep expanding its asset purchase programme, at a time when the US Federal Reserve is cutting its own QE scheme? | Q: Why has the ECB decided to keep expanding its asset purchase programme, at a time when the US Federal Reserve is cutting its own QE scheme? |
| Draghi doesn’t accept the suggestion that the ECB is wrong to keep buying bonds. | Draghi doesn’t accept the suggestion that the ECB is wrong to keep buying bonds. |
| The US recovery is “way more advanced” than in the eurozone, meaning Europe’s inflation outlook is “way behind”, he says firmly. | The US recovery is “way more advanced” than in the eurozone, meaning Europe’s inflation outlook is “way behind”, he says firmly. |
| 2.08pm BST | 2.08pm BST |
| 14:08 | 14:08 |
| Some reaction to Draghi’s comments: | Some reaction to Draghi’s comments: |
| 'communication has been pretty effective' - Draghi pic.twitter.com/4HTgkZ8P6N | 'communication has been pretty effective' - Draghi pic.twitter.com/4HTgkZ8P6N |
| #ECB decision not unanimous. Not a surprise. I guess some have issue with length and open-ended. Majority went for open-ended, so not all!! | #ECB decision not unanimous. Not a surprise. I guess some have issue with length and open-ended. Majority went for open-ended, so not all!! |
| 2.07pm BST | 2.07pm BST |
| 14:07 | 14:07 |
| QE decision was not unanimous | QE decision was not unanimous |
| Q: Was today’s decision unanimous? | Q: Was today’s decision unanimous? |
| No, there were different viewpoints, Draghi replies. | No, there were different viewpoints, Draghi replies. |
| He says there was a “broad consensus on several issues, and a large majority on other issues.” | He says there was a “broad consensus on several issues, and a large majority on other issues.” |
| 2.05pm BST | 2.05pm BST |
| 14:05 | 14:05 |
| Q: How did the ECB go about preparing the public for today’s changes? | Q: How did the ECB go about preparing the public for today’s changes? |
| My understanding is that the market reaction was pretty muted, Draghi replies, even though the policy announcement was fairly important. | My understanding is that the market reaction was pretty muted, Draghi replies, even though the policy announcement was fairly important. |
| That shows that our communication was pretty effective. | That shows that our communication was pretty effective. |
| 2.03pm BST | 2.03pm BST |
| 14:03 | 14:03 |
| Draghi says there are global factors influencing inflation...but the ECB is focused on the factors closer to home, which it can influence. | Draghi says there are global factors influencing inflation...but the ECB is focused on the factors closer to home, which it can influence. |
| He points out that the eurozone has created more than seven million jobs in the last four years - a sign that his policies are bearing fruit. | He points out that the eurozone has created more than seven million jobs in the last four years - a sign that his policies are bearing fruit. |
| 2.00pm BST | 2.00pm BST |
| 14:00 | 14:00 |
| Draghi is hammering home that the ECB will continue to reinvest the stock of existing assets bought under QE since 2015. | Draghi is hammering home that the ECB will continue to reinvest the stock of existing assets bought under QE since 2015. |
| This has become “more and more important” as we’ve bought “a lot of bonds” smiles Draghi: | This has become “more and more important” as we’ve bought “a lot of bonds” smiles Draghi: |
| Draghi: The stock of purchased assets has become more and more important | Draghi: The stock of purchased assets has become more and more important |
| When I announced the reinvestment policy in December 2015 "there was no reaction", says #Draghi with a very telling smile. | When I announced the reinvestment policy in December 2015 "there was no reaction", says #Draghi with a very telling smile. |
| The ECB has bought something like two trillion euros of bonds since it plunged into QE in 2015. Draghi’s point is that the programme will still have a major impact on the economy, as the ECB plans to buy new bonds when its existing holdings mature. | The ECB has bought something like two trillion euros of bonds since it plunged into QE in 2015. Draghi’s point is that the programme will still have a major impact on the economy, as the ECB plans to buy new bonds when its existing holdings mature. |
| So there are no plans to start cutting the size of the programme - something the US Federal Reserve is just starting to do. | So there are no plans to start cutting the size of the programme - something the US Federal Reserve is just starting to do. |
| 1.52pm BST | 1.52pm BST |
| 13:52 | 13:52 |
| #Draghi: "atmosphere was positive in governing council" (growth side) "different on inflation" (energy prices) #ECB pic.twitter.com/cnaysxRdU6 | #Draghi: "atmosphere was positive in governing council" (growth side) "different on inflation" (energy prices) #ECB pic.twitter.com/cnaysxRdU6 |
| 1.52pm BST | 1.52pm BST |
| 13:52 | 13:52 |
| Q: Did you discuss alternative courses of action, before deciding to cut the pace of the APP to €30bn per month? | Q: Did you discuss alternative courses of action, before deciding to cut the pace of the APP to €30bn per month? |
| No, says Draghi. The “atmosphere was pretty positive” at today’s meeting, thanks to the increase in employment across the eurozone and rising wages. | No, says Draghi. The “atmosphere was pretty positive” at today’s meeting, thanks to the increase in employment across the eurozone and rising wages. |
| The discussion thus ‘converged’ on the idea of halving the pace of the QE programme, and running for at least another nine months, although there were “some differences” about the details. | The discussion thus ‘converged’ on the idea of halving the pace of the QE programme, and running for at least another nine months, although there were “some differences” about the details. |