The European Central Bank has kept its benchmark interest rate at 0.05% and given details of its asset purchase program announced last month. The bank's head Mario Draghi said it would start buying covered bonds this month and other assets in the final three months of the year. This would go on for two years.
The ECB is looking to add liquidity to the financial system, boost lending and lift flagging economic growth. Covered bonds are those backed by public sector loans or mortgages.
The bank's rate-setting meeting took place in Naples, Italy, where protesters have faced riot police outside the Capodimonti Palace, where Mr Draghi is held his press conference.
Mr Draghi did not say how much the bank would spend on buying assets, just that the programme would have a sizeable impact on the bank's balance sheet and would support specific market sectors.
The bank had already said it would not be buying government bonds like other central banks have done. Mr Draghi said the program should ease the monetary policy stance of the bank.
He said the bank was committed to using additional unconventional instruments in the future should inflation remain low for too long.
Meanwhile consumer price inflation in the Euro zone fell to 0.3% in September, its lowest rate for almost five years and well below the ECB's target of close to, but below, 2%.
The Euro zone economy was stagnant between April and June this year, with the German and Italian economies shrinking, following growth of just 0.2% in the first quarter.
Mr Draghi suggested the chances of a strong turnaround in the region's economy were slim. The recovery is likely to continue to be dampened by high unemployment, sizeable unutilized capacity and continued negative bank loan growth to the private sector.
In particular, the recent weakening in the Euro area's growth momentum, alongside heightened geopolitical risk, could dampen confidence and, in particular, private investment.”
Top Comments
Disclaimer & comment rulesUsing our money to store up your crumbling project..
Oct 03rd, 2014 - 01:15 pm 0So quit moaning and leave.
Oct 03rd, 2014 - 02:11 pm 0We will,
Oct 03rd, 2014 - 05:46 pm 0as soon as you give us the vote,
ooppss
you cant can you, shh
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