ECB hints at further monetary stimulus for eurozone

19 Aug 16

The European Central Bank has hinted that it could take further measures to boost eurozone growth at its September meeting if the impact of the UK’s Brexit vote weighs on the bloc’s economy.


Mario Draghi, president of the European Central Bank

Mario Draghi, president of the European Central Bank


Minutes from a meeting of the bank’s governing council in July, published today, suggest the bank may choose to extend its lose monetary policy beyond its next meeting.

The bank’s top policymakers said that the latest wave of uncertainty unleashed by the Brexit vote required “very close monitoring”.

“It was seen as important to closely monitor the transmission of policy measures which had worked well so far, to ensure that the pass-through of the accommodative monetary policy stance to the economy was not jeopardised,” the minutes said.

“The view was widely shared that the governing council needed to reiterate its capacity and readiness to act, if warranted, to achieve its objective, using all instruments available within its mandate.”

The bank has currently set ultra-low interest rates of 0.4% to encourage spending in the eurozone and has also established an €80bn per month bond-buying programme. Analysts widely expect the stimulus measures to be continued in September.

But the bank also noted that the eurozone’s recovery remains on track and that the fallout of Britain’s decision to leave had so far been more muted than anticipated.

“Although the outcome led to a significant decline in government bond yields, overall the consequences had thus far been less marked,” the minutes said.

“The impact of the referendum was perceived to be geographically confined and to affect mainly the United Kingdom, and Europe more generally.”

However, the governing council warned that risks to the eurozone had increased, and that the uncertainty surrounding Britian’s exit “could affect the global economy in deeper and less predictable ways”.

Did you enjoy this article?

Related articles

Have your say


CIPFA latest

Most popular

Most commented

Events & webinars