FRANKFURT – European Central Bank head Mario Draghi has indicated that the bank will look for ways to maintain the current supply of monetary stimulus at its next meeting, on Dec. 8.
Draghi said Monday in the European Parliament that the bank’s leadership “will assess the various options that would allow the governing council to preserve the very substantial degree of monetary accommodation necessary” to raise inflation toward the bank’s goal of just under 2 per cent.
The central bank is to discuss whether to extend its 1.77 trillion euros ($1.87 trillion) in bond purchases, a stimulus program that pumps 80 billion euros per month into the economy of the 19 countries that use the euro as their shared currency.
The earliest end date for the program is March, 2017. Analysts think the bank may extend that by three or six months. The ECB may face difficulties in finding enough bonds that meet its purchasing requirements; Draghi has said bank committees are working on ways to continue the smooth implementation of the program.
Inflation has picked up to 0.5 per cent in October, better than minus 0.1 per cent in May but still far from the bank’s goal of just under 2 per cent considered best for the economy. The eurozone saw growth of 0.3 per cent in the third quarter. Unemployment remains high at 10.0 per cent but is falling slowly.
The ECB is the chief monetary authority for the shared currency. It sets benchmark interest rates and supervises the biggest banks. Since the eurozone’s woes with high debt started in late 2009 with a financial crisis in Greece, the ECB has also deployed unconventional measures to try to increase lending and business activity such as ultra-cheap long-term loans to banks as well as bond purchases with newly printed money, known as quantitative easing.