Draghi hints ECB stimulus may be extended beyond March
Mario Draghi has signalled the European Central Bank probably won't stop its quantitative-easing programme without tapering it first, indicating that the stimulus is likely to run past the currently scheduled end-date of March 2017.
"An abrupt ending to bond purchases, I think, is unlikely," the ECB president said in Frankfurt yesterday. A sudden stop "is not present in anybody's mind".
The comments keep the ECB on track for a potential extension of its bond-buying programme, as predicted by economists. Mr Draghi said the Governing Council didn't discuss prolonging or tapering in this policy meeting, while noting that the publication of fresh economic forecasts in December, as well as the results of internal studies on options to avoid running into bond shortages, will help the decision then.
"Everyone expects him to do more but it's hard, given what he said today, to be sure in any way of what they are going to do in December," said Richard Barwell, an economist at BNP Paribas Investment Partners in London. "There is this constant angst now of 'will they, won't they?' They would be in a much better place if they described what is their plan given conditions."
Yesterday, the ECB left interest rates unchanged - including keeping the main headline interest rate at zero and retaining a small but significant charge for banks parking money on deposit with the central bank overnight. The 25-member Governing Council reaffirmed that asset purchases will continue to run at the pace of €80bn a month until March 2017. How those purchases will end - whether they are phased out over months or years - remains a subject of intense speculation. (Bloomberg)