European Central Bank determined to stick with stimulus plan
FRANKFURT, Germany (AP) The official account of the European Central Bank's last policy meeting show top officials expressing determination to stick with the full 1.1 trillion euros ($1.2 trillion) of their planned stimulus even though the 19-country eurozone economy shows signs of finally picking up.
Minutes to the March 5 meeting of the bank's governing council in Nicosia, Cyprus released Thursday showed that "all the members" agreed there was "no room for complacency."
Members stressed that the stimulus, which involves the monthly purchase of 60 billion euros worth of government and corporate bonds with newly created money through September 2016, "had to be fully implemented and supported by appropriate communication." The purchases started March 9.
The bank's intentions have a significant impact on a wide array of people - from stock and bond investors to European exporters, U.S. corporations and consumers.
The stimulus - at a time when the U.S. Federal Reserve is preparing to move in the opposite direction by possibly raising interest rates this year - has sent the euro plunging against the dollar. That helps eurozone exporters but has burdened earnings for U.S. corporations that do business in Europe. The stimulus has also helped shore up European stock markets as well as government bonds.
The ECB is the top monetary authority for the countries that share the euro currency, known as the eurozone.
The 25 governing council members - who are not mentioned by name in the written summary of their discussion but include ECB President Mario Draghi - felt there were grounds for "prudent optimism." But they warned that their own improved economic forecasts for this year and next are based on the assumption that the bank will execute the full amount of the planned purchases, and continue them beyond September 2016 if needed.
They said that their forecast of 1.5 percent growth this year and 1.9 percent next "should therefore not be interpreted as suggesting that the latest monetary policy measures were less necessary."
The ECB is trying to raise worrisome low inflation and stimulate growth to reduce high unemployment. The bond purchases inject new money into the financial system and the economy - which can raise inflation - and have driven down already low borrowing costs for companies, individuals and governments.
The economy, which grew 0.3 percent in the third quarter of last year, has been boosted by low oil prices that leave more money for consumers to spend, and by a sharply weaker euro that helps exporters. Economic indicators show business activity picking up and unemployment has eased slightly but remains high at 11.3 percent.