Tags: EU | Europe | Economy

ECB Officials Debated Stimulus Move at Last Meeting

Friday, 20 November 2015 08:01 AM

FRANKFURT, Germany (AP) — Top officials at the European Central Bank debated expanding monetary stimulus for the eurozone economy at their last meeting - before deciding to hold off any changes until December.

The written account of the Oct. 22 meeting released Thursday shows the bank's governing council remains worried about persistent low inflation and the impact on Europe of the economic slowdown in China and other emerging markets.

The account says that "the view was put forward" that a case for more action could be made "already at the current meeting."

That view was countered by arguments that domestic demand was strengthening and that more analysis was needed. The bank held off any new action, but the fact that a discussion was held at all suggests a higher level of concern about the economy among at least some members of the bank's governing council.

ECB President Mario Draghi has said the bank could increase its stimulus at the Dec. 3 meeting. It could increase the size of its 1.1 trillion euro ($1.2 trillion) program of bond purchases, which pumps newly printed money into the economy. He indicated the bank could also cut the interest rate for deposits kept by private-sector bankks at the ECB's super-safe deposit facility, which is already negative 0.2 percent.

The rate-setting council expressed concern that the current low rate of inflation - an annual 0.1 percent in October - could continue for longer than expected. The bank's goal is just under 2 percent and it has had to cut its forecasts for future inflation several times.

Low inflation is a sign of a weak economy, and also makes it harder for economically struggling members of the eurozone such as bailed-out Greece to become more competitive by reducing their business costs relative to other members of the currency union.

The current stimulus program based on bond purchases had run for eight of its planned 19 months, but "had so far not been able to deliver a noticeable impact on its final target, i.e. moving inflation decisively to a higher path," the account said. The ECB has also slashed interest rates, moving its main benchmark to only 0.05 percent annually, a record low. Low rates stimulate the economy by lowering costs for businesses to borrow, invest and expand.

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Top officials at the European Central Bank debated expanding monetary stimulus for the eurozone economy at their last meeting - before deciding to hold off any changes until December.The written account of the Oct. 22 meeting released Thursday shows the bank's governing...
EU,Europe,Economy
380
2015-01-20
Friday, 20 November 2015 08:01 AM
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