clear
Wednesday January 17th, 2018 4:39PM

European Central Bank close to revisiting stimulus program

By The Associated Press
Related Articles
  Contact Editor

FRANKFURT, Germany (AP) — Top officials at the European Central Bank may revise their outlook for their massive monetary stimulus program early this year, according to an account of their last meeting.

The report published Thursday showed the officials remained wary at their Dec. 14 meeting of prematurely signaling an expected exit from the bond-buying program, which is credited with helping an accelerating economic recovery in the 19 countries that use the euro currency.

Members of the 25-person governing council that sets monetary policy widely agreed on "the merits of a steady hand in communication" in order to keep investors from anticipating an eventual end to the stimulus and sending market interest rates higher in anticipation.

At the Dec. 14 meeting, the ECB council left benchmark interest rates and its stimulus program unchanged. The bank had said in October it would continue its bond-buying stimulus at a reduced rate of 30 billion euros ($36 billion) per month at least through September, but left the exact end date unclear.

But the members felt that as the recovery proceeds, the language about stimulus withdrawal "could be revisited early in the coming year" — that is, early in 2018. The council's next meeting is Jan. 25.

The news raised expectations of more detail on a possible end date for the bond-buying stimulus program. That pushed the euro up Thursday by a sharp 0.6 percent in currency markets against the dollar, to $1.2015

The bank's stimulus policy has aimed at overcoming sluggish inflation and growth in the wake of the Great Recession and subsequent eurozone debt crisis that saw several members of the currency union need bailouts from the other members.

The stimulus has had wide-ranging effects for ordinary people. The purchases have driven down long-term interest rates, helping businesses and governments that need to borrow, but depriving savers of all but the most miserly returns on conservative holdings such as bank deposits. ECB President Mario Draghi credits the stimulus with re-energizing the economy and helping create millions of new jobs as the eurozone's unemployment rate has fallen from above 12 percent to 8.7 percent.

Expansive monetary policy by central banks in major economies is also credited for the recent buoyance in share prices that has sent major indexes to new highs.

The account suggested some pushback from stimulus skeptics, who appear to be a minority on the council. At least one member said that "a gap appeared to be emerging between favorable economic conditions and a policy stance that remained in a crisis configuration." Jens Weidmann, the head of Germany's Bundesbank central bank and a governing council member, has publicly called for fixing an end date. The accounts of the ECB meetings don't include names or vote totals.

The bond-purchase stimulus, launched in 2015, is a way of pumping newly created money into the banking system, a step that should help push inflation higher toward the bank's goal of just under 2 percent. Currently, inflation is running at 1.4 percent in the 19 countries that use the euro currency. The ECB's stimulus effort also includes keeping its benchmark interest rate at a record low of zero.

The ECB is far behind the U.S. Federal Reserve in withdrawing crisis-era stimulus. The Fed has started raising interest benchmarks and letting some of its bond holdings run down as the bonds expire, a step that gradually withdraws some stimulus. The ECB has made clear that it will not raise interest rates until well after its bond purchases end. That means increases are not likely until sometime in 2019.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Financial Services
© Copyright 2018 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Missouri Gov. Greitens acknowledges affair, denies blackmail
Missouri Gov. Eric Greitens acknowledges he has been "unfaithful" in his marriage but denies he blackmailed the woman to stay quiet
8:52AM ( 9 minutes ago )
Walmart raises starting wages, handing out bonuses
Walmart to boost starting salary for US workers to $11 an hour, provide more generous partental benefits, gives out one-time bonuses and assists with adoption costs
8:43AM ( 18 minutes ago )
Arrests, clashes as protests over prices persist in Tunisia
Tunisian police arrested 328 people and fired tear gas while protesters hurled rocks and burned tires, as nationwide demonstrations continued over price rises
8:43AM ( 19 minutes ago )
Associated Press (AP)
Cindy Crawford recreates iconic Super Bowl ad 26 years later
Cindy Crawford is heading back to the Super Bowl: The model has recreated her iconic 1992 Super Bowl ad for Pepsi, now featuring her 18-year-old son
8:06AM ( 55 minutes ago )
Samsung targeted by French lawsuit amid alleged labor abuse
Two French rights groups have filed a lawsuit against electronics giant Samsung, accusing it of misleading advertising because of alleged labor violations at factories in China and South Korea
7:50AM ( 1 hour ago )
YouTube limits Logan Paul vlog due to apparent suicide post
YouTube says it has removed blogger Logan Paul's channels from Google Preferred and will not feature him in the new season of "Foursome."
7:45AM ( 1 hour ago )
AP Business
German economy grew in 2017 at fastest pace in 6 years
Official data show that the German economy, Europe's biggest, accelerated last year to grow by 2.2 percent
5:49AM ( 3 hours ago )
Global shares steady after Wall Street rally fizzles
Global stock markets steady after Wall Street posts first losses of 2018
5:01AM ( 4 hours ago )
German economy grows by a robust 2.2 percent in 2017
Official data show that the German economy, Europe's biggest, accelerated last year to grow by 2.2 percent
4:30AM ( 4 hours ago )
AP Business - Economy
Worries China will lower US asset purchases hits markets
Global shares fall as momentum from Wall Street's long winning streak fades
7:46AM ( 1 day ago )
Global shares slide as Wall Street rally fades
Global shares fall as momentum from Wall Street's long winning streak fades
4:09AM ( 1 day ago )
Asian share prices mostly lower as Wall Street rally fades
Shares fall in Asia as Wall Street's extended winning streak fades
1:06AM ( 1 day ago )
AP Business - Financial Markets
Another GOP governor seeks exclusion from drilling proposal
Another Republican governor is asking the Trump administration to exclude his state from a plan to open more U.S. coastal waters to offshore oil drilling
5:39AM ( 3 hours ago )
Trump lender, other convicted banks get reprieves from feds
Five banks, including a big lender to President Donald Trump, have received temporary reprieves from the administration to run businesses that they otherwise would have had to shut down after criminal convictions
7:21PM ( 13 hours ago )
Dems say Trump action on Florida drilling guided by politics
Opposition to the Trump administration's plan to expand offshore drilling mounts
7:20PM ( 13 hours ago )
AP Business - Industries
Britain presses Germany for EU financial services deal
Britain's Brexit minister and Treasury chief say there's no sense in Germany setting up "unnecessary barriers" to trade in goods and services after Britain leaves the European Union
9:04AM ( 23 hours ago )
Transcripts show Fed divided in 2012 over bond purchases
Transcripts show Fed divided in 2012 over need for third round of bond purchases to lift economy
3:18PM ( 5 days ago )
In new rule, Trump tries to deliver a health care promise
The Trump administration is proposing regulations to facilitate the interstate sale of health insurance policies that cost less but may not cover as much
1:40PM ( 6 days ago )
AP Business - Financial Services
Missouri Gov. Greitens acknowledges affair, denies blackmail
Missouri Gov. Eric Greitens acknowledges he has been "unfaithful" in his marriage but denies he blackmailed the woman to stay quiet
8:52AM ( 9 minutes ago )
Walmart raises starting wages, handing out bonuses
Walmart to boost starting salary for US workers to $11 an hour, provide more generous partental benefits, gives out one-time bonuses and assists with adoption costs
8:43AM ( 18 minutes ago )
Arrests, clashes as protests over prices persist in Tunisia
Tunisian police arrested 328 people and fired tear gas while protesters hurled rocks and burned tires, as nationwide demonstrations continued over price rises
8:43AM ( 19 minutes ago )
Delta's profit dips 8 percent but tops Street's expectations
Delta Air Lines reports fourth-quarter profit of $572 million, down 8 percent from a year ago but easily beating expectations
8:42AM ( 19 minutes ago )
Lawmakers see boost for immigration deal after Trump remarks
Congress' immigration negotiators dig in, hoping to take advantage of a window of opportunity opened by President Donald Trump
8:34AM ( 28 minutes ago )