Amsterdam, 21/04/2016 (Agence Europe) - On Thursday 21 April, the President of the ECB, Mario Draghi, said that the accommodative monetary policy, which aims to guarantee “price stability and the whole of the Eurozone, not just for Germany”, was starting to pay off.
Following the decisions we made in early March (see EUROPE 11509), “financing conditions in the Eurozone have improved” and the pass-through of the monetary policy stimulus to firms and households, notably through the banking system, is “strengthening”, Draghi announced after the meeting of the Governing Council, whilst acknowledging that “global uncertainties” persist.
The central governor said that the monetary iyounstitute had basestarted to increase its monthly purchasing of assets in the framework of the 'quantitative easing' (QE) operation to €80 billion. This programme will be extended until March 2017, “or beyond, if necessary”, in other words if the medium-term inflation trajectory is not consistent with the ECB's aim. “In June”, we will start purchases of securities issued by non-bank enterprises in the Eurozone with the highest ratings from the ratings agencies (corporate sector purchase programme, or 'CSPP'), he added. The ECB also provided more details on the conditions for these positions (securities with ratings not below BBB-, minimum majority of six months and maximum maturity of 30 years at the time of purchase). Lastly, the first operation of the new targeted longer-term refinancing operations ('TLTRO II'), an unconventional operation also announced in March this year, will begin.
Response to German criticism. When asked about German criticism of the policy of very low or even negative rates set by the ECB, which is directly affecting German savers, Draghi stressed the independence of the European institution, which is the guarantor of the treaties: the ECB “obeys the law, not policies”. “Our mandate is to preserve price stability and the whole of the Eurozone, not just Germany”, he said. Adding that he firmly believes that the ECB's policies “are working”, he said that these were “not all that different from the (monetary) policies of the rest of the world”. He went on to say that “low interest rates are not a European feature. They are a symptom of low growth and of low inflation, and were not caused by the monetary policy”.
The German finance minister, Wolfgang Schäuble, is reported to hold the ECB responsible for some part of the election success of the Eurosceptic party AfD in Germany's recent regional elections.
Following a reduction of the main interest rates in March, the ECB on Thursday kept unchanged the interest rates for principal refinancing operations (0.00%), of the marginal loan facility (0.25%) and of the deposit facility (-0.40%). These rates will remain low for an extended period, well beyond the end of the 'quantitative easing' operation, Draghi reiterated. (Original version in French by Mathieu Bion)