ECB To Explore Cheap Loans Amid 'Fragile And Fluid' Economic Outlook: Minutes
January 10 2019 - 4:25AM
RTTF2
European Central Bank policymakers are likely to explore the
unconventional policy of granting cheap long-term loans to banks in
the coming months as they chose to adopt a cautious stance towards
terming the risks to the euro area economic outlook as "downside",
minutes from December policy session showed on Thursday.
Following the December 12-13 Governing Council session, the ECB
confirmed that it is ending its massive EUR 2.3 trillion asset
purchase programme in December and trimmed the growth and inflation
projections for this year.
ECB President Mario Draghi said the risks surrounding the euro
area growth outlook were still "broadly balanced", but "the balance
of risks is moving to the downside", owing to geopolitical
uncertainties, protectionist threats, emerging market
vulnerabilities and financial market volatility.
"It was underlined that the situation remained fragile and
fluid, as risks could quickly regain prominence or new
uncertainties could emerge," the minutes said.
However, some members cited the emergence of new upside risks
and said the recent negative news have been factored into the
downward revision of the staff projection.
"Against this background, caution was expressed against moving
the balance of risks to the downside," the minutes said.
Members agreed that the current assessment of risks being
"broadly balanced" struck the necessary balance between confidence
in the medium-term outlook and acknowledgment of the recent
weakness in data and indicators.
"Looking ahead, the suggestion was made to revisit the
contribution of targeted longer-term refinancing operations to the
monetary policy stance," the minutes said.
Under TLTRO, the ECB gives longer-term loans to financial
institutions at attractive rates to boost lending in the real
economy.
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