| Businessweek | - |
ECB
President Mario Draghi reacts whilst speaking during a news conference
where he unveiled historic measures to face down inflation, in Frankfurt
today.
Bloomberg News
European Central Bank President Draghi News Conference (Text)
ECB
President Mario Draghi reacts whilst speaking during a news conference
where he unveiled historic measures to face down inflation, in Frankfurt
today. Photographer: Martin Leissl/Bloomberg
Following is a transcript of European
Central Bank President Mario Draghi’s comments from his monthly
news conference in Brussels today.
DRAGHI: Ladies and gentlemen, the vice president and I are
very pleased to welcome you to our press conference. We will
now report on the outcome of today’s meeting of the Governing
Council, which was also attended by the commission vice
president, Mr. Rehn. In pursuing our price stability mandate, today we decided on a combination of measures to provide additional monetary policy accommodation and to support lending to the real economy. This package includes further reductions in the key ECB interest rates, targeted longer-term refinancing operations, preparatory work related to outright purchases of asset-backed securities, and a prolongation of the fixed-rate, full allotment tender procedures. In addition, we have decided to suspend the weekly fine-tuning operation sterilizing the liquidity injected under the Securities Markets Programme.
The decisions are based on our economic analysis, taking into account the latest macroeconomic projections by Eurosystem staff and the signals coming from the monetary analysis. Together, the measures will contribute to a return of inflation rates to levels closer to 2 percent.
Inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 percent. Looking ahead, the Governing Council is strongly determined to safeguard this anchoring.
Concerning our forward guidance, the key ECB interest rates will remain at present levels for an extended period of time in view of the current outlook for inflation. This expectation is further underpinned by our decisions today. Moreover, if required, we will act swiftly with further monetary policy easing. The Governing Council is unanimous in its commitment to using also unconventional instruments within its mandate should it become necessary to further address risks of too prolonged a period of low inflation.
Let me now briefly describe the individual measures decided today. Further details will be published at 3:30 p.m. on the ECB website.
First, we decided to lower the interest rate on the main refinancing operations of the Eurosystem by 10 basis points to 0.15 percent and the rate on the marginal lending facility by 35 basis points to 0.40 percent. The rate on the deposit facility was lowered by 10 basis points to minus 0.10 percent. These changes will come into effect on June 11, 2014. The negative rate will also apply to reserve holdings in excess of the minimum reserve requirements and certain other deposits held with the Eurosystem.
Second, in order to support bank lending to households and non-financial corporations, excluding loans to households for house purchases, we will be conducting a series of targeted longer-term refinancing operations, TLTROs. All TLTROs will mature in September 2018, that is to say, in around four years.
Counterparties will be entitled to borrow, initially, 7 percent of the total amount of their loans to the euro area non-financial private sector, excluding loans to households for house purchase, outstanding on 30 April 2014.
Lending to the public sector will not be considered in this calculation. The combined initial entitlement amounts to some 400 billion euros. To that effect, two successive TLTROs will be conducted in September and December 2014. In addition, from March 2015 to June 2016, all counterparties will be able to borrow, quarterly, up to three times the amount of their net lending to the euro area non-financial private sector, excluding loans to households for house purchase, over a specific period in excess of a specified benchmark.
Net lending will be measured in terms of new loans minus redemptions. Loan sales, securitizations, and write-downs do not affect the net lending measure. The interest rate on the TLTROs will be fixed over the life of each operation, at the rate on the Eurosystem’s main refinancing operations, that is to say, the MRO, rate prevailing at the time of the take-up, plus a fixed spread of 10 basis points.
Starting 24 months after each TLTRO, counterparties will have the option to make repayments. A number of provisions will aim to ensure that the funds support the real economy. Those counterparties that have not fulfilled certain conditions regarding the volume of their net lending to the real economy will be required to pay back borrowings in September 2016.
In addition, the Governing Council decided to extend the existing eligibility of additional assets as collateral, notably under the additional credit claims framework, at least until September 2018.
end quote from:
No comments:
Post a Comment