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Mario Draghi says about possible expansion of QE programme in December


This Thursday after the ECB meeting Mario Draghi reiterated his desire to expand current QE programme.  Possible term of expansion is December, when the ECB is going to perform stimulating measures. At the meeting the ECB remained interest rate unchanged at 0.05%.  Deposit rate remained unchanged at negative 0.2%.


In his speech Mario Draghi announced already known risks for leading economies, such as slow paces of inflation growth along with China’s economic problems, problems in emerging markets and fall of raw materials prices.


Draghi assured that the ECB was ready to make efforts to stimulate economic growth and achieve target inflation rate.  Some structural subdivisions have been already asked to assess all risks of current instruments and provide in a report until December.


According to the ECB members, current QE programme has already stimulated growth of lending. However, its actions did influenced inflation. On the contrary, it was a fall of consumer prices by 0.1% in September, and medium-term inflation level does not reach 2%.


The ECB members argued that dynamics of low prices could cause a desire to wait with spending until the next price fall. This situation leads to a fall of wages, which may negatively influence GDP growth. Deflation puts pressure on debts, as rate of real money becomes bigger. On this background the ECB is trying to assure households that negative inflation is a short-term tendency, and in the nearest future it will be stabilized at 2%.


Draghi warned that inflation was destabilized along with a possible preserving of low inflation growth and further fall of oil prices.  He added that the ECB was ready to act immediately in case of high risks.