ECB Governing Council member Peter Praet speaks in Washington:

  • Interventions in sovereign bond market would entail stronger signal that ECB was stay accommodative for extended time
  • Sovereign bond interventions should have spillover to inflation expectations, could indirectly encourage lending
  • Government bonds only market where size not an issue
  • Full text

“Lower oil prices boost real incomes and may lead to higher output in the future. But we may not have that luxury at present”

“If purchases of government bonds were to reduce banks’ opportunity cost of lending by lowering the return of other alternative investments, this might create the incentives for banks to extend credit to the private sector, in particular if banks regain confidence and start to reappraise the macroeconomic outlook as a result of central bank action.”

“Early next year the Governing Council will reassess the monetary stimulus achieved, the expansion of the balance sheet and the outlook for price developments.”

Peter Praet ECB Dec 9

Peter Praet today

“Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council remains unanimous in its commitment to using additional unconventional instruments within its mandate. This would imply altering early next year the size, pace and composition of our measures.”

These comments are similar to what the ECB has said before.