ECB ends asset buys, on lookout for future risks
frankfurt — The European Central Bank officially ended on Thursday its lavish post-crisis asset purchase scheme but promised to keep feeding stimulus into an economy struggling with an unexpected slowdown and political turmoil.
Having long flagged the end of quantitative easing, the ECB had little choice but to stop the bond buys. But it signalled it would take its time before tightening policy any further given slower growth, a looming trade war, the prospect of a hard Brexit and budget tensions in Italy and France.
“Continuing confidence and increasing caution,” was how ECB President Mario Draghi at his news conference described the Bank’s basis for ending the €2.6 trillion ($2.95 trillion), four-yearlong QE scheme.
Asked for an assessment of how effective he thought the unprecedented stimulus package had been in helping the eurozone to emerge from the 200708 financial crisis, he said that for some of the last four years QE had “been the only driver of this recovery”.
Hoping to reassure markets, the ECB earlier repeated its promise that rates would be kept at their current record lows at least through next summer and that it would keep open-ended the time horizon for reinvesting cash from maturing bonds.
“The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates,” the ECB said.
That was a tweak to its previous guidance that reinvestments would continue for an “extended period” after bond buys end.
Draghi also added that the decision on reinvestments was unanimous. —