The bond buying of quantitative
easing "is planned until September 2016 or even
longer if necessary," ECB chief Mario Draghi said Thursday,
stressing the need to fully implement the asset-buying
programme.
The ECB has decided to increase the share limit on its
public-sector purchase programme from 25% to 33%, Draghi said.
That means the ECB could buy more of a single asset,
addressing fears that it might run out of bonds to buy.
The governing council on Thursday also decided to keep the
key ECB interest rates unchanged, leaving the rate at 0.05%.
The economic recovery will continue but at a slower rate
than previously forecast, Draghi said.
The ECB lowered its growth and inflation forecasts.
It lowered its growth forecasts for the eurozone from
+1.5% to +1.4% for this year and from 1.9% to 1.7% for next.
It also lowered its eurozone inflation forecasts from 0.3%
to 0.1% for this year, from 1.5% to 1.1% for 2016 and from 1.8%
to 1.7% for 2017.
Draghi said that "we could see negative numbers for
inflation in the next few months but the ECB considers them
transient because of low oil prices".
He said "available information indicates a slower
increase in inflation compared to previous forecasts".
It was still "premature", however, to say whether
developments in oil prices "will have a lasting impact on
prices".
The ECB is "ready to use all available instruments within
its mandate" to address changes in inflation prospects, Draghi
said.
Draghi said a 'bail-in' for Greece would have been
counterproductive and the ECB argued against it at Eurogroup
meetings.
He said the ECB has "evidence our monetary policy works",
citing improved credit in countries under economic stress such
as Spain and Italy.
Turning to China, Draghi said the country "has affirmed a
commitment that it made at the G20 regarding exchange rates and
the Chinese government must continue to implement reforms to
ensure the convertibility of its currency," adding that the
issue will be addressed at the next G20.
"We are observing a weakening of the prospects for the
Chinese economy," he said, which he explained results in two
effects: one on "trade channels, which weakens the economies of
other countries, and one "on confidence" which affects stock
markets.
Thursday was Draghi's 68th birthday.
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