- Recent market volatility hasn't materially affected outlook
- QE seen working largely as intended, has flexibility if needed
The European Central Bank will ensure its policy stance remains as accommodative as needed amid financial-market turbulence, according to Executive Board member Peter Praet.
“The Governing Council will remain vigilant that recent volatility does not materially affect the broad array of financial conditions and therefore lead to an unwarranted tightening of the monetary-policy stance,” Praet said Thursday in a speech in Bussum, the Netherlands. “It has emphasized its willingness and ability to act, if warranted, by using all the instruments available within its mandate.”
The ECB is struggling to revive growth and inflation in the 19-nation euro economy, with structural weaknesses in some member countries weighing on domestic demand and a slowdown in emerging markets threatening to undermine exports. Global financial markets have been battered since China unexpectedly devalued its currency last month, and a rebound in stocks this week ended in the U.S. on Wednesday after jobs data that bolstered the case for higher rates.
ECB policy makers meeting last week revised down their economic outlook through 2017 and President Mario Draghi pledged to expand stimulus if needed. The central bank has so far relied on record-low interest rates, long-term loans to banks, and a 1.1 trillion-euro ($1.2 trillion) asset-purchase plan.
Officials have lined up to say that the bond-buying program could be adjusted. Governing Council member Erkki Liikanen, the head of Finland’s central bank, noted in a speech in Zagreb on Thursday that the economic recovery in the euro area is proceeding at a slower pace than expected.
“We are generally satisfied with how these measures are working so far, and we will continue our monthly asset purchases until the end of September 2016, or beyond if necessary,” Praet said. “We have a mandate and we’ll do whatever it takes.”