Draghi Says ECB To Do What It Must To Raise Inflation Quickly
November 20 2015 - 1:59AM
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Policymakers are set to review the factors that are acting as a
drag on euro area inflation and will use all available tools to
bring price growth to target if there are downside risks to the
outlook, European Central Bank President Mario Draghi said
Friday.
"If we decide that the current trajectory of our policy is not
sufficient to achieve that objective, we will do what we must to
raise inflation as quickly as possible," Draghi said in a speech in
Frankfurt.
Draghi had revealed in October that policymakers discussed
interest rate cuts. The accounts of the October 22 rate-setting
session, released Thursday, confirmed that policymakers are set to
review all available tools in December that will help to achieve
the ECB's price stability goal of bringing inflation 'below, but
close to 2 percent'.
On December 3, the bank is widely expected to raise the size of
its monthly asset purchases to EUR 80 billion from EUR 60 billion
and also extend the EUR 1.1 trillion programme beyond its September
2016 deadline. A reduction of the already-negative deposit rate is
also possible.
"We consider the APP [asset purchase programme] to be a powerful
and flexible instrument, as it can be adjusted in terms of size,
composition or duration to achieve a more expansionary policy
stance," Draghi said.
"The level of the deposit facility rate can also empower the
transmission of APP, not least by increasing the velocity of
circulation of bank reserves."
Policymakers are not yet confident that the process of economic
repair in the euro area is complete. If the 19-nation needs more
monetary stimulus, the ECB will not hesitate to provide, he
added.
Regarding inflation, Draghi pointed out that the low level of
underlying inflation suggest relatively weak price pressures going
forward. "In making our assessment of the risks to price stability,
we will not ignore the fact that inflation has already been low for
some time," he said.
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