ECB’s Draghi says December meeting is key for policy decisions

EU-Euro-Europe-Eurozone-700x450.jpgThe European Central Bank will hold off any major decision on their monetary policy until December, president Mario Draghi confirmed.

Speaking at the press conference following today’s announcement on maintaining its policy stance, Draghi said the central bank key meeting will be held in December when the ECB’s internal QE committee will report back to the Governing Council and when the ECB will reveal its new growth and inflation forecasts for 2019.

Draghi confirmed the ECB’s committee has so far not discussed policy changes or tapering. He said any notion of an “abrupt end to bond purchases is unlikely”, adding:  “we didn’t discuss tapering or the intended horizon of our asset purchase programme”.

However, Draghi said the committee touched on negative interest rates in today’s meeting, saying having lower interest rates in Europe has “worked”.

He says: “We briefly talked about low rates and the conclusion was that they don’t hinder the transmission of our monetary policy. Low rates work, they work as well as in other policy jurisdictions.”

Draghi says between 2014 and 2016 lower rates have generated cumulative inflation of 1.4 per cent and more than 1.3 per cent of additional growth.

He adds: “We have eliminated fragmentation…Net loan demand continues to increase, credit standards continue to increase for households and are unchanged for financial corporation companies. But expect more banks tightening.”

Overall, Draghi is positive on the Eurozone economic outlook with the growth remaining “moderate but steady”, but he says future growth is “expected to be dampened by still subdued foreign demand” coupled with the absence of bold government reforms.

“Risks to euro area growth outlook remain tilted to the downside” he says.

The inflation outlook doesn’t look rosy either, despite rising to 0.6 per cent in September from 0.3 per cent the month before, according to Eurostat figures.

Draghi says: “Inflation is likely to pick up in [the] next few months, mostly due to base effects. Inflation rates should increase further in 2017 and 2018. No signs yet of convincing upward trend in underlying inflation.”