FRANKFURT, Germany: Top officials at the European Central Bank remain open to providing new stimulus to raise inflation in the Eurozone economy — but for now are emphasising carrying out measures they have already agreed on.
That’s according to a written account released Thursday of the September 8 meeting of the bank’s 25-member governing council.
The council members stressed their commitment to continue at least through March 2017 with the stimulus programme under which the ECB is buying 80 billion euros ($90 billion) in bonds every month with newly created money. The programme aims to raise inflation from an annual 0.4 per cent toward the bank’s goal of just under 2 per cent, considered more in line with a healthy economy.
That stimulus, along with record low benchmark interest rates, “had not yet filtered through to final variables such as growth and inflation,” according to the account.
Bank officials during the discussion chaired by President Mario Draghi decided that they needed to make “a strong call to European policymakers” to support the ECB’s measures “with adequate fiscal policies and structural reforms to achieve strong, sustainable and balanced growth.”
At his post-meeting news conference on September 8, Draghi urged politicians to play a stronger role in promoting growth by making their economies more business-friendly by cutting back on red tape and excessive worker protections that discourage hiring. He has also suggested they could spend more on infrastructure and other forms of public investment if they can do that without excessive deficits. Draghi has repeatedly made similar calls over the past several years but governments have been slow to respond, instead focusing on shrinking deficits and shying away from tackling politically difficult reforms.
Draghi made it clear at the news conference that the council did not discuss extending the bond purchases. But he did say that the bank was looking at ways to get around any possible shortage of bonds to purchase” current limits on the amounts and kinds of securities the bank can purchase have led to concerns it might eventually run up against a limit on how long it can extend the programme.
