ECB goes for new stimulus push to meet inflation goal

ECB goes for new stimulus push to meet inflation goal

ECB’s Governing Council agreed to add $576 bn to its bond-buying programme.

The Dollar Business Bureau 

European Central Bank’s (ECB) President Mario Draghi warned that the fresh stimulus push by the Bank might not be the final one as it strives to meet its inflation goal. 

“The monetary-policy decisions’ intention is to retain the high degree of accommodation in place,” Draghi told reporters in Frankfurt after the meeting of Governing Council, which agreed to add $576 billion (540 billion euros) to its programme of bond-buying and extend this until the next year-end. 

If “the outlook becomes less favourable or financial conditions become inconsistent with further inflation progress, the governing council intends to increase the programme in size or duration,” he added. 

The newest action of ECB comes amidst concerns that the gradual economic recovery risks in the euro area being disrupted as uncertainties in political area cloud the outlook. 

ECB President and his colleagues have regularly stressed that the recovery is mainly reliant on continuous monetary easing because the governments failed to play their role with economic reforms. 

Draghi revealed the new staff economic projections which highlight that the euro-area inflation is averaging at 1.7% in 2019. He said that the figure is ‘not really’ near to the ECB’s aim of keeping the inflation under 2%, and stated the central bank’s line that the baseline situation is subject to downward risks. 

This put forward that the governing council may be ready to keep the stimulus running for long than presently scheduled. 

The ECB President said the officials didn’t talks on tapering of purchases to nil.

The Dollar Business Bureau - Dec 09, 2016 12:00 IST