ECB holds off action until Brexit effects are clearer

22 Jul 16

The European Central Bank is holding out on a decision to take further measures to boost growth in the eurozone until the impact of the UK’s Brexit vote is clearer.


Mario Draghi, president of the European Central Bank

Mario Draghi, president of the European Central Bank


ECB president Mario Draghi said over the coming months, once more information is available, the bank “will be in a better position” to assess how the Brexit vote has affected growth and inflation in the bloc.

He said the bank will monitor economic and financial markets closely and will use “all the instruments available within its mandate” if necessary.

This follows the lead of the Bank of England, which chose to delay action for the time being, but further interest rate cuts or an expansion of the ECB’s quantitative easing programme could be in store in future.

For now, interest rates will remain unchanged at the 0% rate set in March, and the bank’s money printing programme stays at €80bn.

Earlier this week, the International Monetary Fund downgraded the euro area’s growth forecast for 2017 in expectation that the bloc’s economy would take a big hit from the UK’s decision to leave. The eurozone had been performing slightly better than expected in the first quarter of 2016.

Faced with questions from reporters on whether the bank is doing enough, Draghi stressed he would only reiterate his previous comments.

“As I said before, we concluded that we didn’t yet have information to take decisions, and decided, as I said, that over the coming months when we have more information, including new staff projections, we’ll be in a better position to reassess the underlying macroeconomic conditions,” he said.

“No attention was really given to discuss specific instruments at this time.”

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