On Thursday 8 December, the ECB decided to extend from March to December 2017 its programme for the mass buy-back of mainly public securities ('quantitative easing' or 'QE'), but reducing the monthly pace of acquisitions from €80 billion to €60 billion.
This decision to extend the duration of the QE programme whilst reducing its scope has been interpreted by some as a signal sent out to the detractors of the highly accommodative monetary policy of the ECB, which is keeping interest rates very low and making saving less attractive.
It is not a matter of tapering our programme: this subject was not discussed today, said the President of the institution, Mario Draghi, following the meeting of the Governing Council. He said that one of the main messages sent out by this meeting is that the ECB will maintain a consistent present on the markets.
QE will therefore continue until the end of 2017 "or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim" of returning to a level close to but below 2%, an ECB press release reads. If the inflation prospects become less favourable once again, the ECB reserves the right to increase the volume and/or extend the term of the programme. Additionally, conditions related to the maturity of the public debt securities acquired have been relaxed.
Keeping QE in place is also a way for the ECB to tackle the risks to the moderate economic recovery in the Eurozone. When asked about the health of the Italian banks and the political situation in the country, the former governor of the Bank of Italy said he saw no specific risk to the Eurozone, but did not deny the existence of political uncertainty. "Look at next year's election calendar" in Europe, growth levels in the rest of the world and certain financial markets, he said in justification of the ECB's determination to be prepared for any eventuality.
The ECB also announced its growth and inflation forecasts for the Eurozone, which remain broadly the same as in the September exercise. Growth, which will continue to be subjected to largely downwards risks, is expected to stand at 1.7% of GDP in 2016 and 2017, and at 1.6% in 2018 and 2019. Inflation is expected to stand at 0.2% in 2016, 1.3% in 2017, 1.5% in 2018 and 1.7% in 2019.
When asked about the differences in approach between the ECB's continuation of QE and the Eurogroup's refusal to adopt a slightly expansionist aggregated budgetary policy, Draghi stressed the composition of the national budgetary policies, which could, he explained, be more conducive to growth, particularly by means of support for investment. Countries that have some leeway could act in support of growth in full compliance with the Stability Pact, which continues to be our "anchor of stability", stressed.
Lastly, the Frankfurt-based monetary institution made no changes, on Thursday, to the interest rates for the principal refinancing operations (0.00%), the marginal loan facility (0.25%) and the deposit facility (-0.40%). These rates will remain low for an extended period that will continue for a good while beyond the end of the QE operation. (Original version in French by Mathieu Bion)