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ECB Past Records:
Updates on 24 November 2019 The future of the euro area economy Speech by Speech by Christine Lagarde, President of the ECB, at the Frankfurt European Banking Congress (Frankfurt am Main, 22 November 2019) Extracts: Ongoing trade tensions and geopolitical uncertainties are contributing to a slowdown in world trade growth, which has more than halved since last year. This has in turn depressed global growth to its lowest level since the great financial crisis. These uncertainties have proven to be more persistent than expected, and this is clearly impacting on the euro area. Growth is expected to be 1.1% this year, i.e. 0.7 percentage points lower than we projected a year ago. At the same time, there are also changes of a more structural nature. We are starting to see a global shift – driven mainly by emerging markets – from external demand to domestic demand, from investment to consumption and from manufacturing to services.
And when global growth falls, stronger internal demand can help protect jobs, too. This is because domestic demand is linked more to services – which are more labour-intensive – while external demand is linked more to manufacturing, which is less labour-intensive. We are seeing that shield in action in the euro area today: the resilience of services is the key reason why employment has not yet been affected by the global manufacturing slowdown. But there is also a second benefit to strengthening the domestic economy, which is that it facilitates rebalancing. More dynamic internal growth offers a way to improve the functioning of the euro area and to accelerate crisis recovery.
But if internal demand is too weak and inflation too low, such rebalancing across countries obviously becomes harder. And to some extent, this is what we saw in the euro area after the crisis. As demand was stronger in our trading partners, vulnerable countries had to reverse their imbalances mainly by increasing net exports outside the euro area. Importantly, strengthening internal growth is fully consistent with all countries maintaining their competitiveness. If countries boost growth by investing in productive areas of the economy, it not only lifts demand in the short run. It also provides the ingredients for maintaining competitiveness in the face of long-run global challenges.
The ECB’s accommodative policy stance has been a key driver of domestic demand during the recovery, and that stance remains in place. As laid out in the ECB’s forward guidance, monetary policy will continue to support the economy and respond to future risks in line with our price stability mandate. And we will continuously monitor the side effects of our policies. But it is clear that monetary policy could achieve its goal faster and with fewer side effects if other policies were supporting growth alongside it. One key element here is euro area fiscal policy, which is not just about the aggregate stance of public spending, but also its composition. Investment is a particularly important part of the response to today’s challenges, because it is both today’s demand and tomorrow’s supply. While investment needs are of course country-specific, there is today a cross-cutting case for investment in a common future that is more productive, more digital and greener.
Updates on 25 October 2019 ECB Press Conference dated 24 October 2019: Introductory Statement by Mr Mario Draghi, President of the ECB with Questions and Answers Extracts: Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. We expect them to remain at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.
As decided at our last meeting in September, we will restart net purchases under our asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November. We expect them to run for as long as necessary to reinforce the accommodative impact of our policy rates, and to end shortly before we start raising the key ECB interest rates.
We also intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when we start raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.
Updates on 19 October 2019 Statement by Mario Draghi, President of the ECB, at the fortieth meeting of the International Monetary and Financial Committee (Washington, D.C., 18 October 2019) Latest monetary policy decisions The ECB’s Governing Council decided in September on a package of monetary policy measures to support the convergence of inflation towards its medium-term inflation aim. This package includes the following elements: - The interest rate on the deposit facility was reduced by 10 basis points, to ‑0.50%. It is to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2%. - Net asset purchases will be restarted under the asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November. The Governing Council expects these purchases to run for as long as necessary. - Reinvestment of the principal payments from maturing securities purchased under the APP will continue, in full, for an extended period of time past the date when the Governing Council starts raising the key ECB interest rates, for as long as necessary. - The modalities of the new series of quarterly targeted longer-term refinancing operations (TLTRO III) were changed to preserve favourable bank lending conditions, ensure the smooth transmission of monetary policy and further support the accommodative stance of monetary policy. The interest rate for TLTRO III can now be as low as the average interest rate on the deposit facility and the maturity of the operations was extended from two to three years. - Finally, the Governing Council decided to introduce a two-tier system for reserve remuneration in which part of banks’ holdings of excess liquidity will be exempt from the negative deposit facility rate, so as to support the bank-based transmission of monetary policy.
Updates on 13 September 2019 ECB Press Conference on 12 September 2019 Policy decisions summarised: (1) The interest rate on the deposit facility will be decreased to -0.50%. The interest rate on the main refinancing operations and the rate on the marginal lending facility will remain unchanged at their current levels of 0.00% and 0.25% respectively. The Governing Council now expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation sufficiently close to, but below, 2%. (2) Net purchases Asset purchase programme (APP) will be at a monthly pace of €20 billion as from 1 November. The Governing Council expects them to run for as long as necessary and to end shortly before it starts raising the key ECB interest rates. (3) Reinvestments of the principal payments from maturing securities purchased under the APP will continue, in full, for an extended period of time for as long as necessary to maintain favourable liquidity conditions. (4) For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III operations will be lower, and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation. The maturity of the operations will be extended from two to three years. (5) In order to support the bank-based transmission of monetary policy, a two-tier system for reserve remuneration will be introduced, in which part of banks’ holdings of excess liquidity will be exempt from the negative deposit facility rate. ECB introduces two-tier system for remunerating excess liquidity holdings (12 September 2019) ECB staff macroeconomic projections for the euro area (September 2019)
Updates on 26 July 2019 ECB Monetary Policy Decision released on 25 July 2019 European Central Bank (ECB) 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%, 0.25% and -0.40% respectively. The key ECB interest rates to remain at their present or lower levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to its aim over the medium term.
ECB to continue reinvesting, in full, the principal payments from maturing securities purchased under the asset purchase programme for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.
Introductory Statement by President of ECB dated 25 July 2019 is here.
Updates on 18 June 2019: ECB media released on 18 June 2019: Twenty Years of the ECB’s monetary policy
Looking forward, the risk outlook remains tilted to the downside, and indicators for the coming quarters point to lingering softness. The risks that have been prominent throughout the past year, in particular geopolitical factors, the rising threat of protectionism and vulnerabilities in emerging markets have not dissipated. The prolongation of risks has weighed on exports and in particular on manufacturing.
In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required.
In our recent deliberations, the members of the Governing Council expressed their conviction in pursuing our aim of inflation close to 2% in a symmetric fashion. Just as our policy framework has evolved in the past to counter new challenges, so it can again. In the coming weeks, the Governing Council will deliberate how our instruments can be adapted commensurate to the severity of the risk to price stability.
We remain able to enhance our forward guidance by adjusting its bias and its conditionality to account for variations in the adjustment path of inflation.
This applies to all instruments of our monetary policy stance.
Further cuts in policy interest rates and mitigating measures to contain any side effects remain part of our tools.
And the APP still has considerable headroom. Moreover, the Treaty requires that our actions are both necessary and proportionate to fulfil our mandate and achieve our objective, which implies that the limits we establish on our tools are specific to the contingencies we face. If the crisis has shown anything, it is that we will use all the flexibility within our mandate to fulfil our mandate – and we will do so again to answer any challenges to price stability in the future.
All these options were raised and discussed at our last meeting.
What matters for our policy calibration is our medium-term policy aim: an inflation rate below, but close to, 2%. That aim is symmetric, which means that, if we are to deliver that value of inflation in the medium term, inflation has to be above that level at some time in the future. - ECB President Mario Draghi (18 June 2019)
Updates on 6 June 2019: ECB: Watch ECB Press Conference on 6 June 2019.
ECB Monetary Policy Decisions: (1) 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%, 0.25% and -0.40% respectively. The Governing Council now expects the key ECB interest rates to remain at their present levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term.
(2) The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the asset purchase programme for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.
(3) Regarding the modalities of the new series of quarterly targeted longer-term refinancing operations (TLTRO III), the Governing Council decided that the interest rate in each operation will be set at a level that is 10 basis points above the average rate applied in the Eurosystem’s main refinancing operations over the life of the respective TLTRO. For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III will be lower and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation plus 10 basis points.
ECB Press Conference Introductory Statement is here.
ECB has set up an internal task force to develop a common understanding of crypto-assets and to assess whether they have an impact on the ECB’s core areas of responsibility. See the outcome.
See the Macroeconomic Projections for the Euro Area.
See the ECB announced details on new targeted longer-term refinancing operations (TLTRO III)
Updates on 10 April 2019: ECB Press Conference 10 April 2019 ECB decided to keep the key ECB interest rates unchanged. They are to remain at their present levels at least through the end of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term. Details on the precise terms of the new series of targeted longer-term refinancing operations (TLTROs) will be communicated at one of the forthcoming meetings. In particular, the pricing of the new TLTRO-III operations will take into account a thorough assessment of the bank-based transmission channel of monetary policy, as well as further developments in the economic outlook. Check: Key ECB interest rates
Other past records were being wiped off in our terminated Twitter account on 10 April 2019.
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