European Central Bank to end QE programme and affirm interest rate guidance at December meeting

European Central Bank to end QE programme and affirm interest rate guidance at December meeting

The European Central Bank (ECB) Governing Council will convene in Frankfurt today, where it’s expected to keep interest rates on

The skyline with its financial district and the headquarters of the European Central Bank (ECB) are photographed in the early evening in Frankfurt

Photo: Reuters/Kai Pfaffenbach

The European Central Bank (ECB) Governing Council will convene in Frankfurt today, where it’s expected to keep interest rates on hold, but confirm the end of the Eurozone’s quantitative easing programme.

The $3 trillion plan has been credited with reviving economic growth in the eurozone by helping to end a period of extended deflation that was brought on by the 2011 debt crisis and reduced demand caused by harsh austerity programmes.

The end of QE leaves the ECB with little capacity to restart the programme to address a future downturn. With interest rates still at -0.4%, further cuts are unlikely to support growth and rate increases would derail the tentative recovery.

While the ECB will likely end net purchases by December 31st, it will retain its $3 trillion in QE assets until the eurozone economy picks up. In addition to its core inflation data, the Governing Council will pay close attention to consumer and business confidence over the coming year. Interest rates are expected to remain consistent for the coming year, with no changes expected in the medium-term.

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