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European Central Bank cuts QE stimulus programme to €30bn per month - business live Mario Draghi hails eurozone recovery after halving stimulus programme to €30bn per month - business live
(35 minutes later)
1.43pm BST
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Economic growth in the eurozone continued “unabated”, declares Draghi proudly.
He says there has been an upswing in business investment. Construction investment has also improved, and eurozone exports are benefitting from the improved picture in the global economy.
Draghi says eurozone growth has continued "unabated." New word in his vocabulary.
Draghi talking about the eurozone economic recovery like a proud dad
But.... there are also downside risks, Draghi continues, including ‘global factors’ and ‘foreign exchange’ effects (ie, the recent strengthening of the euro).
1.39pm BST
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Draghi is talking about how the ECB has ‘recalibrated’ its bond-purchase programme.
It's recalibration and not tapering! #ECB #Draghi #QE #EUR
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Turning to the economic picture, Draghi says that domestic prices pressures are still muted.
Thus, “continued monetary policy support” is needed to underpin the economic outlook and keep inflation on track.
1.37pm BST
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Draghi's press conference begins
Mario Draghi begins by telling reporters that his governing council conducted a “thorough” analysis of the outlook for inflation in the eurozone today.
Draghi confirms that the ECB decided to leave interest rates at their current record low, and expects to leave borrowing costs at these levels for an extended period.
He also confirms that the ECB will maintain its QE programme for another nine months, at a pace of €30bn per month, “or beyond if necessary”.
The ECB stands ready to increase the asset purchase programme in terms of size and or duration if needed, he adds.
Speaking particularly crisply, Draghi concludes:
Today’s monetary policy decisions were taken to preserve the very favourable financing conditions that are still needed for a sustained return of inflation to levels that are close to, but below 2%.
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1.30pm BST
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Mario Draghi's press conference - live feed
Over in Frankfurt, ECB president Mario Draghi is explaining today’s decisions to the press pack.
You can watch it live here:
1.18pm BST
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Anna Stupnytska, global economist at Fidelity International, reckons the ECB was right to maintain its QE programme for another nine months.
She writes:
“The Euro area recovery is certainly becoming more entrenched, with broad-based growth across countries and sectors of the economy. The euro strength seen so far is unlikely to derail the growth story or pave way for a return of deflationary worries.
At the same time, however, given the remaining slack in the labour market, inflation is far below the target and is likely to rise only at a very sluggish pace.
Stupnytska adds that the ECB will be concerned that the Catalan independence crissi could have a “non-negligible” impact on growth.
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German conservative MEP Markus Ferber has heavily criticised the ECB’s decision to extend its stimulus programme.German conservative MEP Markus Ferber has heavily criticised the ECB’s decision to extend its stimulus programme.
Ferber argues that there’s no justification for buying tens of billions of government and corporate bonds each month, with newly created money.Ferber argues that there’s no justification for buying tens of billions of government and corporate bonds each month, with newly created money.
Ferber says:Ferber says:
“The Eurozone is growing strongly, inflation is picking up, and downside risks are minimal. It seems like the textbook case for the right time to phase out quantitative easing and start a normalisation of monetary policy.“The Eurozone is growing strongly, inflation is picking up, and downside risks are minimal. It seems like the textbook case for the right time to phase out quantitative easing and start a normalisation of monetary policy.
Instead the ECB locks in their flawed monetary policy approach for the months to come and defers normalisation indefinitely. I am disappointed that the ECB missed yet another chance to initialise a normalisation of monetary policy. The asset purchasing program will keep distorting the market and lays the foundations for the next crisis.”Instead the ECB locks in their flawed monetary policy approach for the months to come and defers normalisation indefinitely. I am disappointed that the ECB missed yet another chance to initialise a normalisation of monetary policy. The asset purchasing program will keep distorting the market and lays the foundations for the next crisis.”
1.07pm BST1.07pm BST
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The euro has dropped by half a cent against the US dollar since the ECB announcement, to $1.176.The euro has dropped by half a cent against the US dollar since the ECB announcement, to $1.176.
That suggests that some traders had expected a more dramatic cut to the Bank’s stimulus programme.That suggests that some traders had expected a more dramatic cut to the Bank’s stimulus programme.
In theory, the ECB could have decided to buy even fewer bonds per month, or only extended the QE programme by another six months, rather than nine.In theory, the ECB could have decided to buy even fewer bonds per month, or only extended the QE programme by another six months, rather than nine.
12.58pm BST12.58pm BST
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ECB cuts QE: Snap reactionECB cuts QE: Snap reaction
My colleague Richard Partington tweets:My colleague Richard Partington tweets:
ECB says it plans to cut asset purchases from €60bn to €30bn from Jan. Keeping €30bn until Sept 2018. Slow withdrawal from QE.ECB says it plans to cut asset purchases from €60bn to €30bn from Jan. Keeping €30bn until Sept 2018. Slow withdrawal from QE.
Danske Bank have helpfully summarised today’s ECB statement:Danske Bank have helpfully summarised today’s ECB statement:
🇪🇺#ECB extends #QE for 9 months at EUR30bn per month, in line with our expectation. $EURUSD pic.twitter.com/EhKabFjblA🇪🇺#ECB extends #QE for 9 months at EUR30bn per month, in line with our expectation. $EURUSD pic.twitter.com/EhKabFjblA
12.50pm BST12.50pm BST
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ECB cuts QE programme to €30bn per monthECB cuts QE programme to €30bn per month
BREAKING: The European Central Bank has slowed the pace of its stimulus programme.BREAKING: The European Central Bank has slowed the pace of its stimulus programme.
From January 2018, the ECB will buy €30bn of new bonds each month -- that’s down from €60bn per month at present.From January 2018, the ECB will buy €30bn of new bonds each month -- that’s down from €60bn per month at present.
The ECB’s governing council has decided to continue this quantitative easing programme for at least another nine months - or longer if needed.The ECB’s governing council has decided to continue this quantitative easing programme for at least another nine months - or longer if needed.
That means the ECB has taken another step towards ending the era of ultra-loose monetary policy.That means the ECB has taken another step towards ending the era of ultra-loose monetary policy.
The ECB says:The ECB says:
From January 2018 the net asset purchases are intended to continue at a monthly pace of €30 billion until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.From January 2018 the net asset purchases are intended to continue at a monthly pace of €30 billion until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.
If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the APP [Asset Purchase Programme] in terms of size and/or duration.If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the APP [Asset Purchase Programme] in terms of size and/or duration.
The ECB has also left borrowing costs unchanged.The ECB has also left borrowing costs unchanged.
That means the headline eurozone interest rate remains at 0.0%, and banks face a negative interest rate of -0.4% for leaving money in the central bank’s vaults.That means the headline eurozone interest rate remains at 0.0%, and banks face a negative interest rate of -0.4% for leaving money in the central bank’s vaults.
Details and reaction to follow!Details and reaction to follow!
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After a busy morning, City traders are now turning their attention to Frankfurt.After a busy morning, City traders are now turning their attention to Frankfurt.
The European Central Bank is poised to announce the decisions taken at today’s governing council meeting. We’re expecting the ECB to leave interest rates at their record lows, but also outline how it could slow its bond-buying programme (our opening blogpost has more details).The European Central Bank is poised to announce the decisions taken at today’s governing council meeting. We’re expecting the ECB to leave interest rates at their record lows, but also outline how it could slow its bond-buying programme (our opening blogpost has more details).
The decision comes at 12.45pm BST, followed by a press conference with president Mario Draghi at 1.30pm.The decision comes at 12.45pm BST, followed by a press conference with president Mario Draghi at 1.30pm.
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Labour MP Anneliese Dodds, who represents Oxford East, tweets:Labour MP Anneliese Dodds, who represents Oxford East, tweets:
.@CBItweets monthly survey: Retail sales have suffered sharpest monthly decline since fin crisis. Symptom of falling real pay under Tories..@CBItweets monthly survey: Retail sales have suffered sharpest monthly decline since fin crisis. Symptom of falling real pay under Tories.
12.35pm BST12.35pm BST
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In other bad news...the Unite union in Northern Ireland has warned that aerospace company Bombardier is planning to cut 280 jobs at its Belfast plant.In other bad news...the Unite union in Northern Ireland has warned that aerospace company Bombardier is planning to cut 280 jobs at its Belfast plant.
Bombardier faces legal action in the United States from rival Boeing over the development of the C-Series jet.Bombardier faces legal action in the United States from rival Boeing over the development of the C-Series jet.
Boeing alleges its Canadian competitor has been receiving unfair state subsidies to build the new plane. Unite point out however that only last month Bombardier announced a new business partnership with Airbus.Boeing alleges its Canadian competitor has been receiving unfair state subsidies to build the new plane. Unite point out however that only last month Bombardier announced a new business partnership with Airbus.
Davy Thompson, Unite’s regional co-ordinating officer said today:Davy Thompson, Unite’s regional co-ordinating officer said today:
“The jobs to be lost are functional as opposed to operational meaning losses will be concentrated outside the main production lines but this will be devastating news for the workers concerned and their families in the run-up to the end of the year.“The jobs to be lost are functional as opposed to operational meaning losses will be concentrated outside the main production lines but this will be devastating news for the workers concerned and their families in the run-up to the end of the year.
Unite is calling on management to review this decision.Unite is calling on management to review this decision.
12.33pm BST12.33pm BST
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Laith Khalaf, senior analyst at Hargreaves Lansdown, says UK retailers will be hoping the Bank of England doesn’t raise interest rates at its November meeting:Laith Khalaf, senior analyst at Hargreaves Lansdown, says UK retailers will be hoping the Bank of England doesn’t raise interest rates at its November meeting:
These latest numbers from the CBI will only add to the mixed economic signals to be digested by the Bank of England next week when it decides whether to increase interest rates for the first time in over a decade. Retailers will breathe a sigh of relief if the bank chooses not to increase rates and further burden consumers with additional mortgage costs, at a time when they are already feeling a bit of a pinch.These latest numbers from the CBI will only add to the mixed economic signals to be digested by the Bank of England next week when it decides whether to increase interest rates for the first time in over a decade. Retailers will breathe a sigh of relief if the bank chooses not to increase rates and further burden consumers with additional mortgage costs, at a time when they are already feeling a bit of a pinch.
As we enter the key Christmas trading period, the retail industry is desperately in need of some festive cheer.As we enter the key Christmas trading period, the retail industry is desperately in need of some festive cheer.
UpdatedUpdated
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12.21pm BST12.21pm BST
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Full story: Alarm sounds over state of UK high streetFull story: Alarm sounds over state of UK high street
If you’re just tuning in, here’s our news story on the retail sales figures:If you’re just tuning in, here’s our news story on the retail sales figures:
The fastest monthly fall in high street sales since the height of the recession in 2009 has raised fears for the retail sector ahead of the crucial Christmas trading period.The fastest monthly fall in high street sales since the height of the recession in 2009 has raised fears for the retail sector ahead of the crucial Christmas trading period.
A survey by the the CBI found that 50% of retailers suffered declining sales in September while only 15% benefited from an increase, leaving a rounded balance of -36%, the lowest since March 2009.A survey by the the CBI found that 50% of retailers suffered declining sales in September while only 15% benefited from an increase, leaving a rounded balance of -36%, the lowest since March 2009.
The business lobby group said the survey showed retailers were “feeling the pinch” from rising inflation, which has eaten into consumer incomes and squeezed profit margins.The business lobby group said the survey showed retailers were “feeling the pinch” from rising inflation, which has eaten into consumer incomes and squeezed profit margins.
Rain Newton-Smith, the CBI chief economist, said: “While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.”Rain Newton-Smith, the CBI chief economist, said: “While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.”
The gloomy CBI survey came as Debenhams warned of an “uncertain” environment on the high street in the run up to Christmas after suffering a 44% dive in profits.The gloomy CBI survey came as Debenhams warned of an “uncertain” environment on the high street in the run up to Christmas after suffering a 44% dive in profits.
The department store confirmed the closure of two stores, in Eltham, south London, and at Farnborough, Hampshire, affecting about 80 jobs, as sales on the high street continue to fall. They are the first of up to 10 UK branches that Debenhams has earmarked for closure....The department store confirmed the closure of two stores, in Eltham, south London, and at Farnborough, Hampshire, affecting about 80 jobs, as sales on the high street continue to fall. They are the first of up to 10 UK branches that Debenhams has earmarked for closure....
More here:More here:
12.20pm BST12.20pm BST
12:2012:20
Debenhams, the UK department store chain, has added to the uncertainty in the UK retail sector today.Debenhams, the UK department store chain, has added to the uncertainty in the UK retail sector today.
It reported a 44% slide in pre-tax profits at the company over the last 12 months, and warned that the retail environment is challenging.It reported a 44% slide in pre-tax profits at the company over the last 12 months, and warned that the retail environment is challenging.
Sergio Bucher, CEO, says:Sergio Bucher, CEO, says:
The environment remains uncertain and we face tough comparatives over the key Christmas weeks.The environment remains uncertain and we face tough comparatives over the key Christmas weeks.