ECB President Draghi mentions bond purchases and mandate
BNP points out his 'interesting' comments in testimony to European Parliament
European Central Bank (ECB) President Mario Draghi maintained a similar stance on his economic assessment of the Eurozone, but took the time to mention government bonds as a possibility for unconventional measures.
In testimony to the European Parliament's Committee on Economic and Monetary Affairs, Draghi reiterated his view that the risks to the economic outlook were “on the downside” and promised once again to “closely monitor and continuously assess the appropriateness of our monetary policy stance”.
However, analysts at BNP Paribas pointed out that the Draghi alluded to the possibility of using unconventional measures that might include sovereign bond purchases.
“The specific reference to government bonds is interesting, as is the comment regarding structural reforms: 'the ECB has not been created to ensure that governments actually do the right things... we have a mandate',” BNP pointed out in a note to clients after the testimony.
These experts concluded that the staff inflation projections between now and December's meeting will be “a pivotal influence on the ECB's willingness to deliver additional unconventional policy stimimulus in the form of a broad-based asset purchases programme”.
The ECB's next policy decision will be made on 4 December.