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ECB to start asset buying programme | |
(about 1 hour later) | |
The European Central Bank has kept its benchmark interest rate at 0.05% and given details of its asset purchase programme announced last month. | |
The bank's head Mario Draghi said it would start buying covered bonds this month and other assets in the final three months of the year. | |
He said it would continue to buy assets for two years. | |
The bank is looking to add liquidity to the financial system, boost lending and lift flagging economic growth. | The bank is looking to add liquidity to the financial system, boost lending and lift flagging economic growth. |
Covered bonds are those backed by public sector loans or mortgages. | |
The bank's rate-setting meeting is taking place in Naples, Italy, where protesters have faced riot police outside the Capodimonti Palace, where Mr Draghi is held his press conference. | |
Protesters expressed anger about austerity measures, unemployment and poverty. | Protesters expressed anger about austerity measures, unemployment and poverty. |
'Unconventional instruments' | |
Mr Draghi did not say how much the bank would spend on buying assets, just that the programme would have a "sizable impact on the bank's balance sheet" and would support specific market sectors. | |
The bank had already said it would not be buying government bonds like other central banks have done. | |
Mr Draghi said the programme "should ease the monetary policy stance" of the bank. | |
He said the bank was "committed to using additional unconventional instruments" in the future should inflation remain low for too long. | |
Weak outlook | |
Consumer price inflation in the eurozone fell to 0.3% in September, its lowest rate for almost five years and well below the ECB's target of close to, but below, 2%. | |
The eurozone economy was stagnant between April and June this year, with the German and Italian economies shrinking, following growth of just 0.2% in the first quarter. | |
Mr Draghi suggested the chances of a strong turnaround in the region's economy were slim. | |
"The recovery is likely to continue to be dampened by high unemployment, sizable unutilized capacity and continued negative bank loan growth to the private sector. | |
"In particular, the recent weakening in the euro area's growth momentum, alongside heightened geopolitical risk, could dampen confidence and, in particular, private investment." |