FRANKFURT, Germany — The Latest on the European Central Bank’s monetary policy meeting (all times local):
European Central Bank President Mario Draghi says the bank needs “persistence” and “patience in keeping the current stimulus in place” in order to push inflation toward its goal of just under 2 percent.
Draghi said there were various factors keeping prices from rising despite an economic recovery, including backward-looking wage deals based on low increases in the past. He said those factors would eventually fade and wages and prices would rise. But he added, “are we there? The answer is, not yet.”
The bank says it will keep buying 60 billion euros ($69 million) in bonds through year-end and longer if needed. The purchases pump newly printed money into the economy in an effort to push up inflation, which is currently at an annual rate of 1.3 percent.
European Central Bank President Mario Draghi says the bank’s top officials don’t have a date set for considering any change to the bank’s stimulus programs. He said the 25-member governing council was “unanimous in setting no precise date for when to discuss changes in the future.”
Analysts have been expecting the ECB to give a clearer sign at the Sept. 7 meeting of when it might start decreasing its 60 billion euros ($69 million) in bond purchases, which are aimed at raising inflation from 1.3 percent toward the bank’s goal of just under 2 percent. But Draghi said only that the matter would come up “in the autumn.”
The next monetary policy meeting after September is scheduled for Oct. 26.
European Central Bank President Mario Draghi says that measures of inflation “remain overall at subdued levels,” adding that means the 19 country eurozone needs continuing monetary stimulus.
Draghi spoke after the bank’s 25-member governing council left its interest rate benchmarks and policy statement unchanged Thursday.
The bank gave little hint of how it might start withdrawing its 60 billion euros ($69 billion) in monthly bond purchase stimulus, slated to run at least through year end.
Draghi gave the cautious statement despite conceding that the recovery in the eurozone economy could turn out to be “stronger than expected. Inflation remains at 1.3 percent, well below the bank’s goal of just under 2 percent it considers best for the economy.
One analyst says the European Central Bank seems in no rush to start decreasing its extraordinary bond-buying stimulus program.
Carsten Brzeski at ING says that the main message from Thursday’s unchanged policy statement is that the ECB would like to let market participants “start their summer vacation.” Investors had interpreted earlier statements by ECB President Mario Draghi as opening the possibility of an earlier withdrawal, and sent the euro and long-term bond interest yields higher. Thursday’s statement “was a clear sign that the ECB does not want to pour more oil on the small taper tantrum fire seen in financial markets over the past week weeks,” Brzeski wrote.
The ECB says it will keep purchasing 60 billion euros ($69 billion) per month through year end, and longer if necessary. Market analysts expect the purchases to decrease and then end next year, and for Draghi to send a clear signal about that at the Sept. 7 meeting.
The European Central Bank has left its interest rate benchmarks and policy statement unchanged, underlining the bank’s unwillingness to roil markets with premature signals about an exit from its stimulus efforts as the economy recovers.
The decision was announced Thursday after a regular meeting of the bank’s 25-member governing council at its headquarters in Frankfurt, Germany.
The monetary authority for the 19 countries that use the euro currency said in its policy statement that it will keep injecting 60 billion euros ($69 billion) in newly printed money into the economy every month at least through the end of the year, and longer if necessary.
Markets are now waiting for the post-decision news conference held by bank president Mario Draghi for any clues about the bank’s plans.
European Central Bank head Mario Draghi will face questions on Thursday about when and how the bank might withdraw its stimulus measures.
Draghi is not expected to give much away at his news conference following the meeting of the bank’s 25-member governing council, at which no changes in the stimulus are expected.
That’s out of concern that early talk about a stimulus exit could send market interest rates and the euro higher — prematurely blunting the effect of the bank’s 60 billion euros ($69 billion) in monthly bond purchases.
The bank has said the purchases will run at least until the year’s end. Market analysts expect the bank to then start tapering purchases. The bank has said it won’t raise its benchmark interest rate from zero until the purchases end.