ECB says monetary policy stance will remain accomodative

Interest rates are to remain at present or lower levels for an extended period of time, the European Central Bank has confirmed in its monthly bulletin.

According to the bulletin, “the monetary policy stance will remain accomodative for as long as necessary”.

As the report also reads, the Governing Council confirms that it expects the key ECB interest rates to remain at present or lower levels for an extended period of time.

“This expectation continues to be based on an unchanged overall subdued outlook for inflation extending into the medium term, given the broad-based weakness in the economy and subdued monetary dynamics.

With regard to the economic analysis, the ECB said it is quite confident as indicators based on survey data have shown some further improvement from low levels and “confirm the expectation of a stabilisation in economic activity at low levels”

“At the same time, labour market conditions remain weak. Overall, euro area economic activity should stabilise and recover at a slow pace.

The risks surrounding the economic outlook for the euro area continue to be on the downside, the ECB report also said.

“Recent developments in global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions. Other downside risks include the possibility of weaker than expected domestic and global demand and slow or insufficient implementation of structural reforms in euro area countries.”

Addressing fiscal policies, the ECB said that in order to bring debt ratios back on a downward path, euro area countries should not unravel their efforts to reduce government budget deficits.

Click here to read full report.

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