Policymakers at the European Central Bank widely agreed that there was a need for retaining ample monetary policy stimulus to support inflation in the euro area, minutes of the bank’s June 13-14 Governing Council meeting showed Thursday.
ECB rate-setters also stressed that the forward guidance on interest rates should remain “open-ended”.
On June 14, the central bank decided to halve its monthly asset purchases to EUR 15 billion after September and to eventually stop them at the end of the year.
The bank also signaled that the interest rates will remain at their present levels through the summer of 2019.
“There was wide agreement among members that an ample degree of monetary stimulus was still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term,” the minutes, which the ECB calls “accounts”, said.
Further, the minutes said, “…it was felt that the open-ended character of the state-contingent component should be emphasized, with policy rates expected to remain at their present levels for as long as necessary to ensure…a sustained adjustment in the path of inflation.”
Rate-setters expressed caution that the economic slowdown in the euro area witnessed in the first three months of the year was likely to extend into the second quarter in several member countries.
“In the light of prevailing uncertainties that could put a sustained convergence of inflation at risk, it was widely considered prudent to stress the Governing Council’s continued readiness to adjust all of its instruments,” the minutes said.
The ECB policymakers were also concerned about the threat of protectionism and said “the risk of persistent heightened financial market volatility warranted monitoring.”