European Central Bank chief Mario Draghi has put the bank will “review and possibly reconsider” monetary policy at its next assembly in March.
He said eurozone rates would “stay at present or let levels for an extended period” and there would be “no limits” to action to reflate the eurozone.
His ex nsions followed the ECB’s regular meeting, where it kept the bank’s benchmark figure unchanged at 0.05%.
The overnight deposit rate was also left unchanged at -0.3%.
At the ECB caucus in December, this rate had been cut from -0.2% in an attempt to tyrannize banks to lend instead of rking money at the ECB.
In December, the ECB had also enlarged its €60bn-a-month stimulus programme by six months to March 2017.
Eurozone inflation is currently continuous at 0.2%, way below the ECB’s target of near 2%.
“We have the power, willingness and tenacity to act. There are no limits how far we are willing to deploy our policy instruments,” Mr Draghi said.
Howard Slier, chief UK and European economist at IHS Global Insight, said “the stimulus trigger looks cocked and accessible to pull as soon as the March ECB meeting”.
Mr Draghi told a report conference: “As we start the new year, downside risks have spread again amid heightened uncertainty about emerging market frugalities’ growth prospects, volatility in financial and commodity markets and geopolitical risks.”
He signified that could make it necessary to review – and possibly reconsider – fiscal policy at the next meeting in early March.
Analysis: Andrew Walker, economics newsperson, in Frankfurt
Mario Draghi most definitely doesn’t do nic. In the poop indeed, his demeanour in the news conference after the ECB’s governing council meeting didn’t notwithstanding suggest mild anxiety. Still, his words made it plain that he and his policy-making comrades have been watching the new year’s financial market gyrations unquestionably warily.
It’s not the ECB’s job to stabilise stock markets. The Bank’s job is to keep inflation in surcease, but it is currently too low: 0.2% com red with the ECB’s target of below, but close to, 2%.
The monetary market turbulence, especially the fall in oil prices is one reason why, as Mr Draghi conveyed, “inflation dynamics continue to be weaker than expected”. He narrated us the ECB will review policy at its next meeting in March. There is a powerful chance of more action, probably extra quantitative easing, to spur inflation a bit more (yes really).
That meeting will have a new set of ECB macroeconomic projections to spur with.
He said that the recent falls in the oil price meant that inflation was plausible to be “significantly lower” com red with the outlook in early December.
Eurozone inflation was lower than zero – that is, prices were falling – as recently as September, in the main due to falls in international energy prices, rticularly crude oil.
In December, Mr Draghi maintained that eurozone inflation was expected to reach 1% in 2016. How, the ECB’s forecasts were based on the assumption of oil prices averaging more than $50 a barrel this year, and oil is currently beneath $30.
Mr Draghi’s latest comments were seen as dollop to calm stock markets, with shares in Europe rising as his front- ge news conference was under way.
His comments also weakened the euro, which concisely fell below $1.08 against the dollar before regaining foundation.
“ECB president Draghi once again saw the equity markets confirm his ‘wonderful’ status as they jumped almost as soon as he started his speech,” utter Alastair McCaig, market analyst at IG.
“The emphasis shifted from ‘whatever it misappropriates’ to ‘no limits’ where action is concerned, with the small caveat that nothing intention happen until they have had their March meeting.”