Article by ForexTime

An account of the European Central Bank’s final policy meeting of 2015 was published on Thursday showing that some policymakers had backed more forceful monetary stimulus at their controversial December vote before additional modest measures were announced.

Some policymakers wanted a cut to the benchmark interest rate by more than the 10 basis points it delivered, to be in line with investor expectations. The ECB did not act as aggressively in the end, disappointing the markets.
According to the minutes released on Thursday, some of the 25 members of the governing council had pushed for a 20 basis point cut to its deposit rate.

In the event, most of the council backed ECB chief economist Peter Praet’s call for a 10 basis point cut, which left the deposit rate charged on banks’ reserves parked at the central bank in the region at 0.3 per cent.
The account revealed the possibility was also raised of expanding the monthly volume of asset purchases under the ECB’s landmark quantitative easing programme from the current level of €60bn, or of front-loading asset purchases.

The option of extending QE beyond the date Mr Praet tabled — March 2017 — was also considered. While no one backed taking these measures as soon as December, the ECB raised the prospect of more action in 2016 by saying “a reassessment could be made in the future”.

The account also confirmed that the ECB could cut the deposit rate again, saying those in favour of a 10 basis point cut viewed such a move as having “the advantage of leaving some room for further downward adjustments”.

The euro was sold off immediately after the publication of the minutes. EURUSD dipped below the key $1.09 level and remains in the $1.08 handle early on Friday.

Article by ForexTime

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