Outgoing ECB president Mario Draghi adamant bond buying programme has ‘headroom to go on for quite a long time’
Despite shaky outlook, new stimulus measures fall short of expectations amid limited monetary policy options
Timing of rate rises not discussed in Frankfurt meeting leading to speculation rises may be pushed beyond next year
Central bank bank expects to keep rates on hold at record low levels until summer 2019 and reaffirmed plans to wind up bond-buying programme in December.
The ECB will cut the size of its monthly asset purchases in half from January next year, ECB-president Mario Draghi announced on Thursday. Bond and equity markets as well as the euro hardly responded to the announcement.
Just a few months ago, market watchers were convinced the ECB would soon announce a start to reducing its asset purchases. But even though the European economy has since powered ahead, it now looks unlikely that a detailed tapering announcement is due.
The euro has reached multi-year highs against all other major currencies this week after ECB-president Mario Draghi gave a blank speech at the Fed’s Jackson Hole meeting.
The International Monetary Fund has warned against the effects of reining back asset purchases by the European Central Bank, as the ‘Draghi put’ sees its fifth anniversary.
Industry experts are not expecting the European Central Bank to tighten monetary policy at its next rate meeting, despite Mario Draghi’s hawkish mood of late.
As expected, the European Central Bank (ECB) kept rates on hold on Thursday. Hawks’ hopes the ECB may hint on monetary policy tightening were disappointed. But there was a change of tone in ECB-president Mario Draghi’s words.