“This was because the large liquidity that was abundant and the preparation that all central banks have undertaken before, ensuring liquidity lines would be available and certainly the accommodative monetary policies undertaken by all central banks at the present time”, Draghi said.
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Such a measure could prove highly unpopular, with citizens in many countries still angry at having to “bail out” banks following the global financial crisis of 2007-08.
The rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility now stand as 0 per cent, 0.25 per cent and -0.40 per cent respectively.
“Over the coming months when we have more information… we will be in a better position to reassess the underlying macroeconomic conditions”, Mr Draghi added.
Forecasters told the European Central Bank they expected the regional economy to grow at a rate of 1.4 percent next year, a 0.2 percent downward revision.
President Draghi has previously identified Brexit as a key risk that could shave up to 0.5% off Euro-Zone economic growth over the next three years.
Following are highlights of ECB President Mario Draghi’s comments at a post-policy meeting press conference.
But Draghi also noted that growth and inflation were both moving along the path projected in June so more evidence, including fresh staff projections in September, were needed before any decision. “I would stress our readiness, willingness, ability to do so”, Draghi said. The euro staged a modest recovery to 117.48 against the Japanese yen, from a 6-day low of 116.14 hit early in the European session. The euro declined 0.2pc to $1.0995 at 4:57pm Frankfurt time.
The ECB is concerned as it is the eurozone’s bank supervisor.
“We think the most likely option for the European Central Bank is to extend quantitative easing beyond March 2017, possibly by six to nine months”, said Barclays.
“Following the United Kingdom referendum on European Union membership, our assessment is that euro area financial markets have weathered the spike in uncertainty and volatility, encouraging (corrects previous “with courage”) resilience”.
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Aside from the technical aspects, any perceived delays to monetary easing could depress future inflation, which traders say is making investors look at “curve flattening” trades where they buy a higher share of long-dated bonds.
