In today's awaited meeting of the directorate of the ECB, Mario Draghi he left rates unchanged and confirmed the Qe program only in March 2017 or "beyond if necessary", with the technical committees working to "evaluate all options to ensure the correct functioning of the purchasing programme". At the same time, the president of the ECB cut the estimates of GDP for 2017 and 2018 and revised inflation downwards for 2017. Immediately after his words, the European markets slowed down, turning negative.
Traders were disappointed by the absence of new announcements and by the prospect of downside risks to the economy in the coming months, also due to Brexit and weak international demand.
However, Draghi assured the changes in the economic scenario are not so "substantial" as to justify new actions by the ECB and the ECB's monetary policy is judged "effective". For the moment, therefore, carry on like this and no discussion on the extension of the purchase program but focus on the full implementation of the measures already adopted. Draghi also wanted to underline that low interest rates are not the justification for other things that don't work.
Indeed, the Qe program was confirmed at €80 billion per month (already raised from the initial €60 billion) until March 2017 or beyond if necessary. In addition, the ECB Governing Council has instructed the relevant committees to evaluate all options the proper functioning of the purchase programme. "The main thing - explained Draghi - now is to ensure that the decisions taken last March can be applied in the new scenario which is characterized by very low rates, which has clearly reduced the pool of securities who can access the program”.
Meanwhile, the 2017 and 2018 GDP estimates have been reduced to 1,6% and 1.7% and inflation to 1,2% for 2017 while the estimate for 2016 and 2018 remains unchanged. It will take longer time, he said, for inflation to reach below but close to 2% (the ECB's target) "but not much more". However, Draghi reiterated the usual phrase: "if necessary we will intervene with all the tools" ensuring that the ECB will maintain an accommodating orientation "
