The Latest: ECB head says economy still needs support
FRANKFURT, Germany (AP) — The Latest on the European Central Bank’s monetary policy meeting (all times local):
European Central Bank President Mario Draghi says that “an amply degree of monetary stimulus remains necessary” in the economy of the 19-country eurozone.
Draghi spoke after the bank said it would scale back its bond purchase stimulus from 60 billion euros a month to 30 billion euros in January.
The purchases pump newly printed money into the banking system in hopes of raising inflation from the current annual 1.5 percent toward the bank’s goal of just under 2 percent considered best for the economy. Strengthening economic growth that hit 2.3 percent annually in the second quarter means the ECB can ease off on the stimulus pedal slightly and hope that growing wages help it reach its inflation goal eventually.
The European Central Bank says it will cut its bond purchases to 30 billion euros per month from 60 billion euros currently, starting in January.
The move dials back a stimulus measure that has supported the eurozone economy as it heals from a debt crisis that threatened to break up the currency union.
The ECB said Thursday that the purchases would continue at least until September 2018.
The bank kept some flexibility in its statement Thursday, saying that it could increase the purchases if the 19-country eurozone endures a new economic shock.
Steady growth has enabled the ECB to look toward phasing out extraordinary stimulus measures, in hopes that higher wages will eventually push inflation from 1.5 percent to its goal of just under 2 percent.
The ECB also said it was leaving its benchmark interest rates unchanged.
The European Central Bank is expected to say how it plans to ease back next year on its stimulus programs that are credited with a boom in the 19-country eurozone.
The bank will decide Thursday how quickly to reduce the 60 billion euros ($71 billion) in monthly bond purchases. The program injects new money into the economy and pushes borrowing rates down in the wider economy.
Markets will be watching how aggressively the ECB decides to taper off the purchases, including how much longer it expects them to run. Currently they’re slated to run until at least the end of this year.
The decisions could be outlined in a statement, followed by a fuller explanation in a news conference.
The ECB is otherwise expected to leave its key rates unchanged.