Speaking a day after the European Central Bank warned of downside risks to the euro zone, among them Brexit-related uncertainty, Mr Lane said the “fact the market response has been relatively limited does not mean to say that the effect on the United Kingdom economy and therefore on our export capacity will not be significant”. It also said it would not extend the duration of its bond-buying stimulus program.
Advertisement
Draghi used his latest news conference on Thursday to insist that his support package was “effective” while promising there was more ammunition left to deploy if inflation refuses to budge upwards.
The effects have been minimal and it running out of suitable purchases so Draghi said bank experts will now look at what changes are necessary to make the programme run more smoothly. We see opportunities in eurozone peripheral government bonds. They have also been slow to heed calls to cut bureaucracy and special protections for favored professions and trades.
“Transmission of monetary policy has never worked better than it does today”, he added.
Draghi says it will take longer to reach the current 2 per cent target but “not that long”. The move was largely expected as analysts said the bank needed to save some monetary ammunition for a December meeting.
However, the STOXX 600 hit session lows shortly after Draghi said such an extension of the programme had not been discussed, while the euro rose.
Spreads are the difference in yields between corporate bonds and government counterparts. It said it was still buying some 80 billion euros of assets a month.
NY – A gauge of global equity markets fell modestly and the euro strengthened on Thursday after the European Central Bank (ECB) reaffirmed its commitment to run its bond-buying program as long as needed, but did not confirm a specific extension of the plan. The central bank’s 25-member governing council also left its benchmark rate at zero and its rate on deposits from commercial banks at minus 0.4 percent.
EURO SOLID: Europe’s single currency maintained its firm tone after the decision, trading 0.5 percent higher at a two-week high of $1.13. Inflation was just 0.2 percent in August, lower than anticipated and unchanged from July.
The paper estimates that increasing the average maturity of the bonds owned by the European Central Bank to 11 years would increase inflation at its peak by 50 basis points and GDP by 1.4 percent, compared with 40 basis points and 1.1 percent respectively with an average maturity of eight years.
Advertisement
Eurozone inflation – which the European Central Bank aims to maintain at just below 2.0 percent – remains well shy of target, stuck at 0.2 percent in August.
