Excerpts from the Account of the monetary policy meeting of the Governing Council of the European Central Bank held in Frankfurt am Main on Wednesday and Thursday, 7-8 September 2016:
Members widely agreed that policy action at the present meeting was not warranted and that the focus should remain on ensuring the full implementation of the policy measures so far decided. It was therefore seen as important to confirm the Governing Council’s commitment to the monthly asset purchases of €80 billion, which were intended to run until the end of March 2017, or beyond, if necessary, and in any case until the Governing Council saw a sustained adjustment in the path of inflation consistent with its inflation aim.
Overall, confidence was expressed that the monetary policy measures were continuing to provide effective support to the cyclical recovery and the upward path in inflation.
Against this background, and given remaining downside risks and uncertainties relating, in particular, to the external environment, the view was widely shared that financing conditions had to remain supportive to underpin the recovery in growth and inflation. It was therefore of crucial importance to preserve the very substantial degree of monetary support that was embedded in the staff projections, while it was also cautioned that the Governing Council should not be unduly influenced by prevailing market expectations and that it had to remain fully focused on its commitment to achieve its price stability objective over the medium term.
Members also discussed possible future challenges regarding the Eurosystem’s ability to source sufficient eligible bonds in the market under the APP and the request was made to the relevant Eurosystem committees to further evaluate the options to ensure smooth implementation of the programme. The view was widely shared that reassurance had to be provided about the Eurosystem’s ability to ensure the smooth implementation of the APP and its capacity to deliver on its commitment that the programme would run until March 2017, or beyond, if needed. It was underlined that the Governing Council could adjust the parameters of the programme at any time to achieve the intended amounts. There should be no doubt about the Governing Council’s determination to execute its asset purchases in line with its past decisions and to adopt further measures, if needed, to fulfil its price stability objective.
As regards communication, members widely agreed with the proposals presented by Mr Praet in his introduction. Confidence had to be conveyed in the effectiveness of the ECB’s monetary policy measures and the state of the euro area economy, its resilience to global uncertainty and the baseline scenario for growth and inflation. In the light of the prevailing uncertainties, it was also seen as important to reiterate that the Governing Council was monitoring economic and financial market developments very closely and that it was determined to preserve the very substantial degree of monetary accommodation that was necessary to secure a return of inflation to levels below, but close to, 2% over the medium term. Finally, great emphasis had to be placed on the Governing Council’s willingness, capacity and ability to act, if warranted, to achieve its objective by using all the instruments available within its mandate.