Shored up by the convergence of the inflation trajectory towards its main mission, the European Central Bank (ECB) announced on Thursday 14 June that at the end of this year, it will end its operation for the mass buyback of mainly public securities ('quantitative easing' or QE).
Aiming for caution, the European Institute has taken particular care to attach sufficient conditions to its decisions to be able to face any unforeseen circumstances and guarantee a sufficient level of liquidity on the financial markets.
Today's decisions were made unanimously following an in-depth review and “aim at maintaining an ample degree of accommodation”, said the President of the ECB, Mario Draghi, after a meeting of the Governing Council in Riga. We must be “patient, prudent and persistent”, he added, with the Governing Council on standby to adjust the measures taken if necessary.
Up to the end of September, the monetary institute will continue to buy securities at a level of €30 billion per month. If the data it receives confirm the medium-term inflation perspectives, the pace of purchasing will drop to €15 billion until the end of December, when the net purchasing operations will conclude.
Since the 'quantitative easing' operation was launched in 2015, the ECB had acquired nearly €2 trillion worth of public securities by Friday 8 June.
The ECB also announced that it would continue its policy of reinvesting reimbursements of securities reaching maturity acquired in the framework of the 'QE' “for as long as necessary, to maintain favourable liquidity conditions”.
The key interest rates (0% for principal refinancing operations, 0.25% for the marginal loans facility and -0.4% for the deposit facility) will remain at their current levels until the end of summer 2019 at least and until the inflation trajectory is sustainably in line with the target of a level close to but below 2%.
According to ECB economists, Eurozone growth remains robust and covers all sectors of activity, whilst the associated risks remain balanced. Compared to March, the monetary institute has slightly reduced its growth forecasts for 2018, to 2.1% of GDP, whilst leaving those for 2019 and 2020 unchanged, at 1.9% and 1.7% respectively.
Between April and May, Eurozone inflation leapt from 1.2% to 1.9%, on the back of an increase in the prices of foods, oil and services. The ECB has considerably increased its forecasts for 2018 and 2019, to 1.7%.
In the budgetary field, Draghi called upon the Eurozone countries to continue structural reforms and maintain a responsible budgetary policy. During times of growth, the most indebted member states should build up liquidity reserves. There are countries that have done well since the beginning and others that are starting to do well, said the ECB President, who considers that the benefits generated by the sacrifices agreed to during the crisis should not be jeopardised.
On the debate on euro membership, Draghi said again that the euro was “here to stay”, because the single currency is strong, people want to keep it and other countries want to join it.
On the other hand, the ECB urges the Nineteen, which are due to meet on the sidelines of the European summit at the end of June, to deepen Economic and Monetary Union by completing Banking Union and making the Capital Markets Union a reality. (Original version in French by Mathieu Bion)