ECB copies Fed with meetings every 6 weeks
Print Edition
THE European Central Bank is taking a leaf out of the US Federal Reserve’s book and will, from the start of next year, be setting monetary policy every six weeks instead of every month and publishing minutes to its deliberations.
After the bank decided to keep its interest rates on hold yesterday, ECB President Mario Draghi told a press briefing the new timetable for meetings was not a sign that the bank’s job in getting the 18-country eurozone back on track was done.
He said having a meeting every month can cause excess volatility in the markets “that may have little or nothing to do with fundamentals.”
Though Draghi insisted that the ECB would not be synchronizing its meetings with the Fed, their timetables are now very similar. The Fed meets eight times a year, usually every six weeks.
Draghi also fleshed out details of its latest plan to flood commercial banks with cash as it kept interest rates unchanged despite signs that the eurozone economy is losing momentum. One of the problems afflicting the economy, which is suffering from anemic growth and low inflation, is that banks often hold back from lending money to businesses and households.
Draghi said the new 400-billion-euro (US$545 billion) program will help drive inflation back to the target of just below 2 percent. Under the program, banks can bid for loans on a quarterly basis, either alone or in a group with other banks. That money would then have to be loaned on to businesses.
Draghi said the eurozone’s recovery was “moderate” in the second quarter and inflation was “subdued.”
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