EPA

The European Central Bank has left interest rates and its quantitative easing programme unchanged.

Key points

  • ECB holds main rate at 0.00%, deposit facility at -0.40%
  • QE bond buying programme to continue until at least end of 2017
  • Level of QE to drop from €80bn to €60bn per month from April as previously announced
  • Press conference starts at 13:30 GMT

By Gemma Tetlow and Elaine Moore

 

Reuters

The European Central Bank has scaled back its quantitative easing programme from €80bn to €60bn a month from April 2017 and will extend it to the end of next year, in a move that responds to hawks’ concerns about ultra-loose monetary policy but which could unsettle markets. It has held rates as expected.

The ECB insists the step is not equivalent to the US move to gradually “taper” QE that unsettled markets in 2013, instead it argues the move could see it buy more bonds under the extended programme.

Key points

  • ECB holds rates at 0% but extends QE to December 2017
  • Level of bond buying programme cut to €60bn per month from April 2017
  • Asset purchase parameters broadened, including halving of minimum maturity to 1 year
  • Sovereign bond prices recover as Draghi insists tapering has not been discussed
  • Euro slides against the dollar

By Gemma Tetlow and Gavin Jackson

 

Draghi behind EU symbol

The European Central Bank’s governing council has kept interest rates on hold and reaffirmed its plans to run quantitative easing to March 2017 or beyond if needed

President Mario Draghi told the press conference that the committee did not discussion of its quantitative easing programme. But, that a committee has been tasked with evaluating optinos to “ensure a smooth implementation” of the asset purchase programme.

Economic forecasts were slightly downgraded. GDP growth in 2016 is expected to be 1.7 per cent, falling to 1.6 per cent in 2017 and 2018. This compares to a June forecast of 1.6 per cent in 2016, followed by 1.7 per cent in each of 2017 and 2018. The ECB’s forecast for inflation in 2016 remains unchanged at 0.2 per cent. Inflation in 2017 has been revised down to 1.2 per cent, from 1.3 per cent.

Key points

  • Interest rates are kept on hold in September
  • The ECB’s asset purchase target is unchanged at €80bn per month
  • Economic forecasts are slightly downgraded.
  • Draghi says that the downgrades are “not so substantial to warrant a decision to act”
  • Draghi says the ECB did not discuss an expansion of the asset buying programme

 

Draghi behind EU symbol

The European Central Bank’s governing council met today to discuss policy following the UK’s vote to leave the EU.

President Mario Draghi refused to be drawn on the prospect for any further stimulus in September. But he stressed that while Brexit was a “headwind” the financial system had proved resilient.

Key points

  • Rates have been kept on hold
  • Mr Draghi says that markets have shown “encouraging resilience” to the Brexit vote
  • The ECB had not discussed changing the terms of its asset purchases to include a wider range of bonds
  • The recovery is continuing – all be it at a slower pace
  • Shares in Italian banks jumped following Mr Draghi’s statement that a public backstop for non-performing loans would be “very useful”