Date
21 October 2017
Mario Draghi has dropped heavy hints that fresh monetary stimulus may come from the ECB as soon as December. Photo: AFP
Mario Draghi has dropped heavy hints that fresh monetary stimulus may come from the ECB as soon as December. Photo: AFP

Draghi signals more stimulus from ECB

European Central Bank president Mario Draghi said the bank is prepared to roll out another large stimulus package as the eurozone struggles with ultra-low inflation and a tepid recovery.

The measures could include more bond purchases and a cut to the already negative interest rate on deposits, The Wall Street Journal reported.

“We are ready to act if needed. We are open to a whole menu of monetary policy instruments,” Draghi was quoted as saying Thursday after the ECB governing council’s meeting in Malta. 

“The degree of monetary policy accommodation will need to be re-examined at our December policy meeting when the new … projections will be available,” he said, referring to quarterly growth and inflation forecasts issued by ECB staff economists.

The reference to December, which is when the ECB meets next on monetary policy, was noteworthy, because central bankers typically shy away from setting expectations too high for action at a particular time, the newspaper said.

Under a program launched in March, the ECB is purchasing about €60 billion (US$68 billion) a month in mostly government bonds using newly created money in hopes of raising the money supply and boosting lending and spending.

Officials decided at Thursday’s meeting to leave the main refinancing rate — the rate the ECB charges on regular loans to banks — at a record low of 0.05 percent, where it has been for more than a year.

The rate on overnight deposits remains at -0.2 percent, meaning the ECB is charging financial institutions to store surplus funds with it.

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RC/FL

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