ECB further hints at a possible QE: “early next year”

Summary

As expected, at today’s monetary policy meeting the ECB left the key policy rate unchanged at 0.05%. The central bank did not take additional steps on non-standard measures but said that it will reassess current stimuli early next year. Mr. Draghi reiterated the unanimity within the Governing Council (GC) to use unconventional monetary policy instruments within its mandate to tackle a prolonged period of low inflation. However, for the first time, he explicitly said that the central bank could embark on a “pure” quantitative easing (QE) (i.e. purchases of government bonds) without the unanimity of the GC. On the inflation outlook, the GC will be “particularly vigilant” on the impact of oil prices on the medium-term inflation outlook (there was an explicit reference to the need to closely monitor such risk). Meanwhile, downside risks to the economic outlook persist.

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