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| Version 4 | Version 5 |
|---|---|
| ECB promises more action to boost economy if needed | ECB promises more action to boost economy if needed |
| (about 1 hour later) | |
| The president of the European Central Bank (ECB), Mario Draghi, says the bank stands ready to give the eurozone further economic stimulus "should it become necessary". | The president of the European Central Bank (ECB), Mario Draghi, says the bank stands ready to give the eurozone further economic stimulus "should it become necessary". |
| The comments boosted shares in Europe. | The comments boosted shares in Europe. |
| It also prompted a fall for the euro, with analysts increasingly braced for more dramatic stimulus measures. | |
| The bank began an asset purchase programme last month, but has come under pressure to do more to boost weak economic growth in the eurozone. | The bank began an asset purchase programme last month, but has come under pressure to do more to boost weak economic growth in the eurozone. |
| The ECB's regular policy meeting left interest rates unchanged at their record low of 0.05%, as expected. | The ECB's regular policy meeting left interest rates unchanged at their record low of 0.05%, as expected. |
| Mr Draghi said: "Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate. | Mr Draghi said: "Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate. |
| "The Governing Council has tasked ECB staff and the relevant Eurosystem (central bank) committees with ensuring the timely preparation of further measures to be implemented if needed." | "The Governing Council has tasked ECB staff and the relevant Eurosystem (central bank) committees with ensuring the timely preparation of further measures to be implemented if needed." |
| Opposition | |
| His remarks that ECB staff were working on "further measures" were seen as a sign that preparations were in hand for the type of wide-scale action taken by the US, the UK and Japan in the form of quantitative easing (QE). | |
| In September, the bank's head Mario Draghi announced an asset buying programme, although not as wide scale as other central banks' recent QE programmes, which have involved buying mainly government debt - something that is hugely controversial within the eurozone and fiercely opposed by Germany. | |
| The ECB's attempt to kick some life into the sluggish eurozone economy is to buy covered bonds and other assets for two years. | The ECB's attempt to kick some life into the sluggish eurozone economy is to buy covered bonds and other assets for two years. |
| Covered bonds are those backed by public sector loans or mortgages. | Covered bonds are those backed by public sector loans or mortgages. |
| Action in this market is limited, not just by the asset category, but by the relatively small number of these in circulation. | Action in this market is limited, not just by the asset category, but by the relatively small number of these in circulation. |
| Many economists do not think this will be enough to promote economic recovery and there is pressure on Mr Draghi to come up with more. | Many economists do not think this will be enough to promote economic recovery and there is pressure on Mr Draghi to come up with more. |
| Luke Bartholomew, investment manager at Aberdeen Asset Management, said the comments brought the prospect of eurozone QE nearer: "Draghi the politician has won another key fight in the battle to launch sovereign QE. | Luke Bartholomew, investment manager at Aberdeen Asset Management, said the comments brought the prospect of eurozone QE nearer: "Draghi the politician has won another key fight in the battle to launch sovereign QE. |
| "He's yet to convince [Germany] but today's statement makes it more likely that we'll see further action from the ECB in December to boost inflation and demand." | "He's yet to convince [Germany] but today's statement makes it more likely that we'll see further action from the ECB in December to boost inflation and demand." |
| Jennifer McKeown, senior Europe economist at Capital Economics, went further: "Today's statement from Mr Draghi that ECB staff are preparing further monetary policy measures provided the firmest support yet for our long-held view that the Bank will implement full-blown quantitative easing. It is now a matter of when rather than if." | |
| Cuts | |
| Mr Draghi's comments triggered a jump in shares, with France's Cac 40 index and Germany's Dax index both rising by about 1%. | |
| The euro fell by more than a cent against the dollar, dropping from $1.2520 before Mr Draghi's comments to $1.2398 - its lowest level for more than two years. | |
| On Tuesday, the European Commission cuts its growth forecast for the eurozone to just 0.8% for this year, down from a previous estimate of 1.2%. | |
| The commission also cut its growth forecast for 2015 to 1.1% from 1.7%. | |
| Last week, figures from Eurostat showed the rate of inflation in the eurozone edged up to 0.4% in October from 0.3% the month before. | |
| However, inflation still remains well below the ECB's target of close to, but below 2%. | |
| Next month, the ECB will give its latest forecasts for the eurozone area. Its most recent, given in September, forecast growth of 0.9% this year and 1.6% in 2015. | Next month, the ECB will give its latest forecasts for the eurozone area. Its most recent, given in September, forecast growth of 0.9% this year and 1.6% in 2015. |