ECB's gloomy assessment of economic prospects point to further stimulus

Minutes of the European Central Bank’s (ECB) 17 October meeting, published on Thursday showed that policymakers were ready to boost their €1.7 trillion stimulus again, if needed to ensure that Euro-zone’s economy remains on its recovery path. ECB governing council delivered a bleak assessment of economic prospects which point to further stimulus.

Members widely agreed that it is premature to decide on policy and that it is prudent to wait until December to get a clearer picture of the inflation outlook. Minutes also showed that policy makers expressed concerns that underlying inflation “still lacked a convincing upward trend.”

Fears over mounting protectionism, paltry wage growth and a lack of investment were among the risks flagged in the minutes. While officials believed they did not yet have enough information to justify unleashing a fresh round of bond purchases, most agreed that they would be in a better position to do so by the time of the next policy vote on December 8.

"It was imperative to remain fully committed to preserving the very substantial degree of monetary accommodation that was necessary to secure a sustained convergence of inflation towards levels below but close to 2 percent," the ECB said in the accounts.

The council is likely to make a decision in early December on whether to extend its landmark quantitative easing programme past the deadline of March 2017 and the bleak economic  assessment add to expectations that the ECB will continue to buy bonds at the same rate until at least the second half of 2017.

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