Brussels, 22/10/2015 (Agence Europe) - In Valletta on Thursday 22 October, the Governing Council of the ECB asked its services to examine, by December, the advantages and disadvantages of the available monetary policy tools in the event that any further relaxation should prove necessary.
The outcome of our meeting is not “'wait and see' but 'work and assess'”, said the ECB president, Mario Draghi. This is why we have asked the monetary policy committees to assess the “pros and cons of the different monetary policy instruments”. The monetary institute explains that the “strength and persistence” of the factors that are slowing the return of inflation to the target level (close to but below 2%) require “thorough analysis”. On the basis of these analyses and of updated macro-economic projections, the Governing Council will in December carry out a full re-examination of the degree of relaxation monetary policy requires.
In September, annual inflation fell back into negative figures (-0.1%), and in March, the ECB initiated a programme ('quantitative easing', or 'QE' European-style) for the massive buyback of public and private debt instruments (see EUROPE 11395). As of 16 October, the ECB had bought back nearly 371 billion euros' worth of public debt instruments. The ECB will “fully” implement its monthly asset purchases to reach the upper limit of €60 billion, Draghi stressed. He went on to point out that 'QE' European-style, which will run until September 2016 at least, provides enough flexibility in terms of scope, composition and duration.
In addition to stepping up 'QE', other monetary policy options are being looked into. A further cut in the deposit facility exchange rate - currently set at -0.2% - has been discussed, but “this is one of the options”, Draghi acknowledged, adding that no preference in the tools available has been established.
Migration challenge. It is worth noting that the ECB held a brief exchange of views on the migration challenge facing the European Union. “It is very early to say what will be the impact on the euro area economy”, the former Governor of the Banca d'Italia said. He observed that the influx of refugees into Europe will lead to a “very significant increase in labour supply”, which will lead to significant public investment in education and health. “How will these public investments be financed?”, he asked.
Lastly, the ECB has kept unchanged the interest rates on principal refinancing operations (0.05%), of the marginal loan facility (0.3%) and of the deposit facility (-0.2%). (Original version in French by Mathieu Bion)