By Francesco Canepa and Balazs Koranyi
MADRID (Reuters) – The European Central Bank kept interest rates unchanged at record lows on Thursday and its president said that the entity was committed to continue with its programme of asset purchases designed to stimulate growth and inflation.
however, in a press conference, Mario Draghi gave few clues as to the measures the bank could take to the end of this year to ensure that the purchase of assets to proceed without problems, and to simply say that those who take the decisions evaluating the technical conclusions on the various options which they arrived at their experts.
Draghi added that the bank board not discussed to end the program or expand it.
“sometimes it is also important to say what we did not discuss. And did not discuss or gradual withdrawal (from the program of quantitative expansion) or the horizon planned for our asset purchase program,” he said.
Before the recovery “moderate but steady” -in the words of Draghi – the euro zone economy, Draghi felt that the effort of stimuli has been more successful than the ECB had expected, and rejected suggestions that the levels incredibly low rates are counterproductive.
“The conclusion was that they should not hinder the transmission of monetary policy. We do not have any evidence that they are obstaculizándola. In other words, low rates are working,” he said.
as expected, the ECB kept the Thursday the type of deposits in the -0,4% and maintained its guidance that rates will remain at their current levels or lower for an extended period.
The euro came up in the comments of Draghi 0.5 percent to 1,1040 dollars, after playing in the session a minimum of three months of 1,0952. However, subsequently fell to 1,0938 dollars.
The ECB has introduced a stimulus plan without precedent for years with rates below zero, loans free for the banks and more than a trillion euros in the purchase of bonds, all with the hope of reviving growth and raising inflation to its target of just below 2 per cent after more than three years without achieving it.
In the beginning, the plan of the so-called quantitative easing (QE, for its acronym in English) has in march of next year to its expiration date, but the bank has always said that it would last until they see a sustained recovery of the inflation.
Any significant extension of the asset purchases will require the ECB to modify some of the technical limitations of the program to counteract the scarcity of some assets, such as German bonds.
Among those changes could include some of the self-imposed limitations of the ECB, as the rule that prohibits the bank to buy the assets of lower performance to your type of deposit or the rule that requires to buy assets in proportion to the share of each country in the ECB.
“We remain committed to the preservation of the very considerable degree of monetary flexibility that is necessary to ensure a sustained convergence of inflation towards levels below, but close to 2 percent in the medium term”.
“At this time, we have options,” he said of the situation before a meeting in December, where it is expected that there decisions.
SLOW, BUT STEADY
The economy of the euro zone is moving slow, but steady, inflation is in maximum two years, the projects of national budgets suggest a little more fiscal support and the initial impact of the decision british to leave the EU on the economies of the euro area has been muted.
Draghi said it expects the third quarter growth in the eurozone repeat the 0.3 per cent level achieved in the second quarter, while noting that risks to the economic outlook continue to tilt bearish, in large part by external factors.
All of the analysts consulted by Reuters expect rates to remain unchanged and the vast majority of them projected in December an extension of the program of purchase of assets of between three to six months.
For the ECB, the root of the problem is that inflation is still too weak and can not reach the goal is still for another two or three more years as a minimum.
despite that, prices rose 0.4 percent last month, and could exceed the one percent in the spring, the increase is due almost entirely to that vanished into the effects of low oil prices and not to a resurgence of underlying inflation.
The growth of wages remains weak, underlying inflation remains below the one per cent and the unemployment rate is high, suggesting that the inflation is still far from the levels of growth we had expected the ECB.
Draghi reaffirmed the repeated call to the governments of the eurozone to support the bank’s policy with fiscal measures that promote growth with structural reforms, adding that there is the focus on measures that increase productivity and improve the business environment.
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