ECB Members Saw Heightened Downside Risks to Inflation in Sept -- Update
October 08 2015 - 08:27AM
Dow Jones News
By Brian Blackstone
FRANKFURT--European Central Bank officials determined that
downside risks to inflation have intensified over the summer but
more time is needed to gauge the effect of financial market
volatility and slower growth in China, according to the minutes of
the bank's Sept. 3 policy meeting released on Thursday.
Still, officials saw a requirement to emphasize the ECB's
willingness to increase its stimulus programs, if needed, to
address the risks of too-low inflation.
"There was broad agreement that the overall economic situation
in the euro area had become more challenging since before the
summer," the ECB said in the meeting accounts.
Officials broadly concurred that while volatility in financial
markets reflected heightened risk over the economic outlook, "it
was too early to form a sound judgment" on whether the effect would
be lasting on growth and inflation, according to the minutes.
At its Sept. 3 meeting, ECB officials raised the possibility
that they would beef up their EUR60 billion ($68 billion) a month
bond-buying program, which was launched in March and is intended to
run through September 2016.
Asset purchases "are intended to run until the end of September
2016, or beyond, if necessary," ECB President Mario Draghi said in
his introductory statement to a news conference after the
meeting.
Economists interpreted the insertion of the phrase "or beyond,"
which wasn't in previous introductory statements, as a sign that
the bank could extend its more than EUR1 trillion ($1.1 trillion)
bond-purchase program, known as quantitative easing, beyond its
targeted end date.
A recent report showing consumer prices fell 0.1% in September
from the previous year--far below the ECB's target of annual
consumer price growth near 2%--further fanned hopes that the ECB
will eventually increase its quantitative easing program.
Yet recent comments by ECB officials suggest they are in no
immediate hurry to ramp up the bond-buying program, and are instead
gauging the impact on Europe of recent volatility in financial
markets, weak oil prices and signs of slowing in China and other
emerging markets.
According to the meeting minutes, officials stressed that the
bond purchase program is only about one-third complete, "implying
that a substantial degree of accommodation was still in the
pipeline."
Meanwhile, "uncertainty arising from developments in economic
and financial conditions in emerging market economies, particularly
China, had clearly increased," according to the minutes.
But gauging developments in China "was very challenging," the
minutes stated, "and more time and analysis were needed these
developments."
Write to Brian Blackstone at brian.blackstone@wsj.com
(END) Dow Jones Newswires
October 08, 2015 08:12 ET (12:12 GMT)
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