The ECB studying options to extend its program of asset purchases – Yahoo Finance Spain

FRANKFURT (Reuters) – President of the European Central Bank (ECB), Mario Draghi, said Thursday that the agency was evaluating options that allow you to extend your huge program asset purchase, as inflation in the eurozone is still well below the official target.

However, the bank failed to confirm a specific extension of its monthly asset purchases 80,000 million, reaffirming its existing line that the scheme will continue until next or beyond March if necessary.

“the Governing Council instructed the relevant committees (ECB) to assess the options to ensure adequate implementation of our acquisition program, “Draghi said at a press conference after the council of monetary policy leave its key interest rates unchanged.

Draghi revealed a modest reduction in forecasts growth in the euro zone developed by the agency and warned of downside risks, including the uncertainty related to the brexit, but said that for now no action is required.

“at the moment, the changes are not substantial to require a decision to act. We see that our monetary policy is effective, “he said.

The ECB kept its deposits at -0.4 percent, charging banks to park their money one day, and also left unchanged the main refinancing rate, which determines the cost of credit in the economy, at 0.00 percent.

the euro hit a peak in two weeks, bond yields in the euro zone rose and exchanges in the region fell by its confirmation that an extension of the program of asset purchases by the central bank at the meeting was not discussed.

Leaving rates in negative territory and print money at full pace, the ECB hopes to revive inflation and growth in a region already weakened by nearly a decade of economic problems and crisis.

After 18 consecutive months of buying government bonds to give breath to the economy and raise inflation, ECB holdings hit a record level of one billion euros last week, but also is expected prices to rise just 0.2 percent this year, well below its target of almost two percent.

WHAT CAN BE CHANGED

Extend asset purchases it is controversial because it creates risks of further distort market prices and even exhausting eligible bonds. The ECB already had to stop acquisitions in Estonia and last month ran out of bonds to buy in Luxembourg.

That led to growing speculation that it must amend the rules of its program of asset purchases to offer even more stimulus, as widely

is believed to be made before year-end.

the choice is between alter the rules of the purchases or make an even bigger redesign.

the more options simple could include buying bonds that pay less than the bank deposit rate of -0.4 percent, extending the maturity range of eligible bonds to 30 years from 20 years and buy an even larger portion of certain issuances .

larger changes may involve the purchase of new types of assets, such as bank bonds, loans in arrears or, in the extreme case actions.

But each of those changes generate concerns or even direct opposition of the hardliners and the growing field of moderates in the Governing Council, who fear the negative unintended effects of the extraordinary stimulus from the ECB.

the ECB slightly raised its growth projection euro zone to 1.7 percent from 1.6 percent this year, but downgraded to 1.6 percent from 1.7 percent for both 2017 and 2018.

Your estimating a modest takeoff in inflation to 1.2 percent next year and 1.6 percent in 2018 almost unchanged

.