ECB to reduce volume of bonds under asset purchase programme
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ECB to reduce volume of bonds under asset purchase programme 15 June 2018Riga Reporter: Brian Bollen
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The European Central Bank (ECB) is going to start reducing the volume of bonds it buys under its asset purchase programme, after the Governing Council of the European Central Bank in Riga on 14 June.
The ECB expects interest rates to stay at current levels at least through the summer of 2019.
According to the Governing Council, it undertook a careful review of the progress towards a sustained adjustment in the path of inflation. It also took into account the latest Eurosystem staff macroeconomic projections, measures of price and wage pressures, and uncertainties surrounding the inflation outlook.
Based on this review, the Governing Council made the following decisions: First, as regards non-standard monetary policy measures, the Governing Council will continue to make net purchases under the asset purchase programme (APP) at the current monthly pace of 鈧�30 billion until the end of September 2018.
The Governing Council anticipates that, after September 2018, subject to incoming data confirming the Governing Council鈥檚 medium-term inflation outlook, the monthly pace of the net asset purchases will be reduced to 鈧�15 billion until the end of December 2018 and that net purchases will then end.
Second, the Governing Council intends to maintain its policy of reinvesting the principal payments from maturing securities purchased under the APP for an extended period of time after the end of the net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.
Third, the Governing Council decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00 percent, 0.25 percent and -0.40 percent respectively. The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path.
ECB vice-president Luis de Guindos said in his opening remarks to the press conference that followed in Riga: 鈥淭he risks surrounding the euro area growth outlook remain broadly balanced. Nevertheless, uncertainties related to global factors, including the threat of increased protectionism, have become more prominent. Moreover, the risk of persistent heightened financial market volatility warrants monitoring.鈥�
Guindos added that the monetary policy decisions maintain the current ample degree of monetary accommodation that will ensure the continued sustained convergence of inflation towards levels that are below, but close to, 2 percent over the medium term.
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