ECB to keep policy loose for as long as needed

The European Central Bank will keep its loose and growth-supportive monetary policy stance in place for “quite a long time”,ECB executive board members said on Friday.

Written by Reuters | Orleans,france | Published: May 18, 2013 3:25 am

The European Central Bank will keep its loose and growth-supportive monetary policy stance in place for “quite a long time”,ECB executive board members said on Friday.

With the euro zone economy stuck in recession,the ECB cut its main refinancing rate to a record low of 0.5 per cent and extended its provision of unlimited funds to banks by a year at its May policy meeting. Inflation fell to a three-year low of 1.2 per cent in April,allowing some room for manoeuvre. ECB’s Joerg Asmussen said in Berlin the bank’s monetary policy would remain expansive for as long as needed. His colleague Benoit Coeure hit a similar tone when speaking at a conference in Orleans in France,saying the ECB was committed to providing the euro zone with abundant liquidity for as long as necessary.

“We are saying that because we are well aware that rigidities of transmission in the euro zone mean that the monetary policy will have to stay accommodative for quite a long time,” Coeure said.

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