European Central Bank to trim bond-buying programme next year

European Central Bank to trim bond-buying programme next year”

The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively.

The European Central Bank left interest rates unchanged at historic lows and said its bond-buying programme (quantitative easing, QE) would fall from the present rate of 60 billion euros a month to 30 billion from January to September.

The newly-envisaged nine-month taper at a pace of 30 billion euros a month will commit the European Central Bank to spending 270 billion euros.

Also, the ECB will continue to reinvest principal payments from maturing securities it has purchased "for an extended period", the bank said.

The commitment is essential for keeping recent gains for the euro currency against the USA dollar in check, and so prevents a fall in inflation on the back of cheaper imports.

This will bring an end to the programme Draghi implemented in 2015, with Europe one of the last regions to undertake the strategy as a way to stimulate its lagging economy. "All the signals of a recovery are present in the euro zone, but the central bank is still anxious about the sustainability of rising inflation".

At a news conference, Draghi said that the euro zone economic outlook had improved but that core inflation had not yet shown any convincing signs of an upwards trend - the goal of much of the stimulus.

The ECB said it would maintain asset purchases at their current level of €60bn per month until December.

Following is the statement from the European Central Bank following its policy meeting.

Doves on the bloc's periphery, however, warn that a rapid exit could tighten financial conditions, undoing years of work. An unbroken growth streak has created seven million jobs and the expansion is now self-sustaining, driven by domestic consumption.

Recent eurozone economic data has strengthened the ECB's case.

Draghi indicated this was not a major concern at the bank.

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