The Governing Council decided to leave the key ECB interest rates unchanged. The following summary highlights their key points:
- At today’s meeting we [the Governing Council] also decided to continue conducting our main refinancing operations (MROs) as fixed rate tender procedures with full allotment for as long as is needed
- We [the Governing Council] decided that the rate in the last 12-month longer-term refinancing operation, to be allotted on 16 December 2009, will be fixed at the average minimum bid rate of the MROs over the life of this operation
- We [the Governing Council] decided to carry out the last six-month longer-term refinancing operation on 31 March 2010
- The improved conditions in financial markets have indicated that not all our liquidity measures are needed to the same extent as in the past
- Price developments are expected to remain subdued over the policy-relevant horizon
- GDP growth returned to positive territory in the third quarter of 2009. However, some of the factors supporting the recovery at present are of a temporary nature.
- Available survey data suggest that the recovery is continuing during the fourth quarter of 2009
- Eurosystem staff project annual real GDP growth of between -4.1% and -3.9% in 2009, between +0.1% and +1.5% in 2010, and between +0.2% and +2.2% in 2011
- With regard to price developments, as expected, euro area annual HICP inflation has turned positive again after five months of negative rates
- The rise mainly reflects upward base effects stemming from the drop in global commodity prices a year ago
- Inflation is expected to remain moderate over the policy-relevant horizon, with overall price, cost and wage developments staying subdued in line with a slow recovery in demand
- Inflation expectations over the medium to longer term remain firmly anchored
- Eurosystem staff projections foresee annual HICP inflation of 0.3% in 2009, between 0.9% and 1.7% in 2010, and between 0.8% and 2.0% in 2011
- Turning to the monetary analysis, the data for October confirm the ongoing decline in the annual growth rates of M3 and loans to the private sector, to 0.3% and -0.8% respectively
- These concurrent declines continue to support the assessment of a moderate underlying pace of monetary expansion and low inflationary pressures over the medium term
- The current decline in the annual growth rates of monetary aggregates is influenced by a number of special factors and is thereby likely to overstate the deceleration in the underlying pace of monetary expansion
- Base effects associated with the intensification of the financial turmoil in autumn 2008 have had a downward effect on the annual growth rate of M3 in the past two months
- The steep slope of the yield curve provides an incentive to shift funds out of M3 into longer-term deposits and securities
- The annual growth rate of bank loans to the non-financial private sector turned somewhat more negative in October
- Overall financing conditions continue to improve, which should support the demand for loans in the period ahead
- Banks are currently faced with the challenge of managing the size and structure of their overall balance sheets
- Banks should address this challenge by taking appropriate measures to strengthen further their capital bases
- With all the measures we have taken in response to the intensification of the financial crisis, we have supported both the availability of liquidity to the banking sector and the recovery of the euro area economy
- We [the Governing Council] expect that our policy action will continue to progressively feed through to the economy