ECB drops big hint over future stimulus

The European Central Bank left policy unchanged on Thursday (October 29), resisting pressure to unveil new stimulus measures.

But it dropped the clearest hints yet of fresh action at its next policy meeting.

In a statement the central bank said it stood ready to ‘recalibrate its instruments’.

This week’s decision to hold fire came despite France and German facing new lockdowns.

The ECB also warned that the ongoing crisis poses major risks to growth.

But for now it’s in no hurry to act, having already lined up unprecedented firepower.

In the spring bank chief Christine Lagarde set aside 1.35 trillion euros for bond purchases - that’s almost 1.6 trillion dollars.

Buying about 100 billion euros a month, that has pushed borrowing costs to record lows.

Now the bank still has about half of that cash to spare, giving it enough to keep markets calm.

Economists say the question is whether the ECB has to rethink its growth forecasts, and its resulting strategy.

The central bank currently expects the euro zone to grow back to pre-crisis levels by the end of 2022.