ECB chief hints at boosting QE after December review
The European Central Bank left interest rates and its money-printing programme unchanged yesterday and President Mario Draghi, inset, said it would review in December what more it could do to tackle threat of weak inflation.
Falling commodity prices and emerging market concerns are weighing on economic prospects, he said.
Mr Draghi told a news conference that the bank would fully pursue its asset purchase scheme up to €60bn a month and underlined he could extend it beyond September 2016 as part of efforts to boost Eurozone growth and bring inflation closer to its target of close to 2pc.
But in a direct call to Eurozone governments to add their weight to a still tentative recovery in the region, he stressed that monetary policy "should not be the only game in town". "Fiscal policies should support the economic recovery, while remaining in compliance with the EU's fiscal rules," he said. The ECB decision to hold key interest rates at record lows was widely expected ahead of the meeting of its top policy-makers in the Maltese capital of Valletta. Most attention was on clues as to whether it was ready to expand or extend the bond-buying scheme launched in March.
Although some rate-setters have argued that the ECB should tweak the asset purchases now, most believe that quantitative easing needs to be given more time to work as its positive effects are just starting to pass through. Mr Draghi emphasised that argument, saying that while risks to inflation and growth remained on the downside, deeper analysis was required before taking further action. (Reuters)