ECB Still Sees Bond-Buying Phased Out as Rates Stay on Hold
ECB Still Sees Bond-Buying Phased Out as Rates Stay on Hold
(Bloomberg) -- The European Central Bank confirmed it will cut bond-buying in half next month and anticipates that new purchases will be halted by the end of the year.
The Frankfurt-based institution said it will buy 15 billion euros ($17 billion) of assets a month from October to December, and that a decision to halt the program after that continues to be contingent on incoming economic data. Policy makers reiterated that interest rates will remain at their present record lows “at least through the summer” of 2019.
Attention now turns to President Mario Draghi’s press conference at 2:30 p.m. in Frankfurt, where he’ll present updated projections for growth and inflation and an assessment of the risks to the outlook.
| ECB interest rates | Current level |
|---|---|
| Deposit rate | minus 0.4 percent |
| Main refinancing rate | zero |
| Marginal lending rate | 0.25 percent |
The euro was little changed on the announcement, which was in line with expectations, and traded at $1.1631 at 1:49 p.m. Frankfurt time.
Read more on today’s central-banking action
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Increased tensions over trade between the U.S. and its partners have begun to filter through into the euro area’s performance, with industrial production recording its first annual drop in 18 months and a European Commission gauge of economic confidence at the lowest in a year.
Another big concern likely to be discussed is Italy. The fledgling government in the region’s third-largest economy is drawing up its spending proposals this month amid reports that Finance Minister Giovanni Tria has threatened to resign over the issue. The European Union requires member countries to keep budget deficits below three percent of output.
Read More: Draghi’s Introductory Remarks at ECB Press Conference: Text
Investors are also looking for information on how the ECB will handle bond redemptions once it no longer buys new assets.
--With assistance from Piotr Skolimowski, Zoe Schneeweiss, Catherine Bosley, Fergal O'Brien, Iain Rogers, Alexander Kell, Martin M. Sobczyk, Brian Swint, Lucy Meakin, Lukas Strobl, Matthias Wabl, Craig Stirling, Kristian Siedenburg, Harumi Ichikura, Catarina Saraiva and Angela Cullen.
To contact the reporter on this story: John Ainger in London at jainger@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow
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