Brussels, 06/11/2014 (Agence Europe) - On Thursday 6 November, the ECB took an extra step towards the adoption of new, unconventional measures, by unanimously asking its staff to guarantee the rapid preparation of these measures, which will be applied only if required.
Our staff have “enough credibility” to prepare measures “to be applied if needs be”, said the President of the ECB, Mario Draghi. These measures - which could include a major scheme to buy back sovereign bonds of countries of the eurozone ('QE European-style') - could be carefully put together, although no concrete date has been set, because “we know that the risks for the eurozone economy on the downside” have increased and that we “have to be prepared” for any eventuality, he added. The launch of these measures will prove necessary in the event that the “current measures” ('TLTRO' mass cash injection operation, programme to buy back asset-backed securities and covered bonds) “are not enough” and if “inflation prospects worsen”. Draghi went on to stress several times the fact that this initiative has the backing of “all the members” of the Governing Council.
When asked about the massive share buy-back programme (EUROPE 11168), the ECB President stressed that the European institution had started to acquire asset-backed securities and that it would “soon” do the same for covered bonds. This programme, which will run for at least two years, will have a “substantial impact” on the “size and composition” of the ECB's balance sheet, which will return to the dimension it had in “early 2012”. Draghi laid emphasis on the fact that the Governing Council unanimously supports this declaration, whereas there have been press reports that some of the governors criticised him for being too far ahead in the quantification of the programme. “It is fairly normal to disagree about things. It happens everywhere, in the UK, in Japan”, said Draghi, who went on to dispute the existence of any “coalition” between governors on either side of the European North-South divide.
The ECB has noted the downwards revision of the growth prospects in the eurozone. Following on from the European Commission on Tuesday (EUROPE 11190), the OECD on Thursday announced the risk that the eurozone represents to world growth. In the eurozone, growth is expected to increase by just 0.3 percentage points to 1.1% of GDP next year. The OECD is arguing in favour of a more robust monetary policy on the part of the ECB.
As regards the publication, from 2015, of summaries of the monthly meetings of the ECB, Draghi announced that the Governing Council was to hold an in-depth discussion on this matter in December. “We are at an advanced stage”, he said. He explained that this exercise was designed to preserve the “independence of the governors” and the “candour of discussions”, as well as to help the markets to interpret the discussions properly.
On Thursday, as it did in October, the ECB decided not to change the level of its reference rate, which was unexpectedly cut in September (EUROPE 11148). The rate of its principal refinancing operations will therefore continue to stand at +0.05%, that of the marginal loan facility +0.3% and that of the deposit facility -0.2%. (MB)