ECB Minutes: All Members Agreed On Need To Act
10 Ottobre 2019 - 10:39AM
RTTF2
The European Central Bank policymakers agreed on the need to act
amid weakening economic outlook but a number of reservations were
expressed about the elements of policy package, the minutes of the
September 11-12 Governing Council meeting showed Thursday.
ECB Chief Mario Draghi said all members agreed on the need to
act in response to the continued shortfall of inflation and
that a clear majority of members supported the proposed
measures.
The Governing Council reiterated the need for a highly
accommodative stance of monetary policy for a prolonged period of
time and that it continued to stand ready to adjust all of its
instruments, as appropriate.
However, there was disagreement on the size and instruments
included in the stimulus package.
At the final policy session of Draghi as central bank chief, the
council took a host of stimulus measures. The bank slashed the
deposit rate by 10 basis points to -0.50 percent and decided to
restart its asset purchase programme.
It was cautioned that the Governing Council should not try to
accommodate market expectations but should base its decisions on
its own assessment, the minutes revealed.
A few members expressed a readiness to consider lowering the
rate on the deposit facility by 20 basis points at the meeting if
the package excluded net asset purchases.
A number of members assessed the case for renewed net asset
purchases as not sufficiently strong as they considered it as an
instrument of last resort which should only be deployed in the
event of more severe contingencies and which was not warranted in
the light of the current outlook.
The minutes said concern was expressed that not delivering
sufficient stimulus, including through the APP, might trigger a
reversal of the current favorable financial conditions.
"A majority of members went along with the proposed introduction
of a two-tier system for reserve remuneration as part of the
overall policy package," the minutes said.
A number of reservations were expressed about the monetary
policy justification for a two-tier system. It was argued that, at
the current juncture, monetary policy transmission channels seemed
to be functioning well.
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