ECB Seeking Stimulus Flexibility

The European Central Bank wants more scope to unleash monetary stimulus even as it heads toward unwinding it.An account of the Governing Council’s July meeting released on Thursday shows that officials are still uncertain how to signal changes in their policy settings as the economic outlook improves and the need for broad-based bond purchases lessens. Reaching a consensus is critical if they are to avoid missteps as the institution enters a new phase of its multi-year battle to avert deflation and restore euro-area price stability.Some policy makers signaled they are anxious to press ahead with adjusting the ECB’s forward guidance to avoid a “misalignment” between communication and the assessment of the economy, while others were looking for an insurance should the situation worsen. They argued for “more policy space and flexibility” to adjust stimulus “if and when needed, in either direction” in response to any overreaction to economic improvements in financial markets.

Source: ECB Searches for Stimulus Flexibility as End of QE Approaches – Bloomberg

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.