Taking time to analyse the factors that explain a slowdown in growth, the European Central Bank (ECB) will maintain its accommodative monetary policy until at least March in a post-quantitative easing era, its President, Mario Draghi, said on Thursday 24 January.
The Monetary Institute remains confident in the strength of the euro area economy, which is supported in particular by very favourable financing conditions and wage increases, although this does not quickly affect the level of inflation. "It's going to happen, it's a matter of time,” Mr Draghi said.
Nevertheless, the former Governor of Banca d'Italia said, the Governors Council acknowledged "unanimously" that, in the face of "worse than expected data", the momentum of economic expansion had weakened and that downside risks to the euro area economy were once again preponderant.
Among the list of factors that negatively affect growth, Mr Draghi cited external factors such as geopolitical risks, rising protectionism, financial market volatility, as well as internal factors such as uncertainty related to Brexit and "political developments" in some euro-area countries.
In response to this situation, "the Governors Council gives itself more time" to refine its analysis and will hold a "new discussion" on Thursday 7 March, on the implications of the economic situation for monetary policy, Mr Draghi said.
Until then, even if the massive repurchase of mainly public securities (‘quantitative easing' or QE) has ended (see EUROPE 12159), the ECB's monetary policy will remain accommodative in several ways: - key rates will remain at current low levels at least until the summer of 2019 and until the inflation path is in line with the ECB's primary mission (inflation close to, but less than 2%); - the policy of reinvesting acquired private and public securities, in particular via QE, will continue over an extended period after a first increase in key rates.
The key ECB rates are as follows: 0.00% for the main refinancing operations, 0.25% for the marginal lending facility and -0.40% for the deposit facility. Markets no longer anticipate a rise in key rates before 2020, while the US FED is sending a signal that it will slow the pace of its own rate increases. (Original version in French by Mathieu Bion)