by winston » Fri Sep 09, 2016 5:40 am
Draghi cool on new stimulus
Mario Draghi said European Central Bank officials will study options to ensure their quantitative-easing program doesn't run out of bonds to buy as he played down the need to commit to new stimulus for now.
The assessment was that for the time being the changes are not substantial as to warrant a decision to act, the ECB president said at a press conference in Frankfurt yesterday.
Bonds declined with stocks while the euro strengthened after Draghi's comments, which downplayed the need for more economic stimulus. Oil rallied.
"The main theme was to make sure that the program and decisions we took in March can be implemented in the new constellation of interest rates, which clearly have restricted the eligibility universe," he said.
With six months to go until the scheduled end of its quantatitive easing, or QE program, the ECB needs to balance increasing concerns about asset scarcity with signs that the region's recovery is losing momentum.
The central bank has missed its target of keeping inflation just under 2 percent for over three years and doesn't foresee reaching it before late 2018.
The 25-member Governing Council earlier kept its main refinancing rate at zero, the deposit rate at minus 0.4 percent and asset purchases at around 80 billion euros a month until March 2017, as predicted in a Bloomberg survey.
While he stressed that policy makers did not discuss the possibility of extending the duration of QE beyond its scheduled end of March 2016, the ECB president reaffirmed the Governing Council's unanimous commitment to carry out current stimulus until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.
"We see that our monetary policy is effective, we see that its full impact is now in the macroeconomic projections, but we also see that there have been considerable decreases in all interest rates," Draghi said. Available evidence so far suggests resilience of the euro area economy to political and economic uncertainties.
Source: BLOOMBERG
It's all about "how much you made when you were right" & "how little you lost when you were wrong"