The members of the governing council unanimously agreed the European Central Bank’s (ECB) monetary policy stance “needed to be reviewed and possibly reconsidered” at its next monetary policy meeting in early March 2016.
According to the minutes from the January 20-21 meeting of the governing council, there was “broad agreement” among members that downside risks had increased again since the start of 2016.
The minutes said: “Although the recovery of the euro area economy was holding up well and financing conditions remained favourable overall, the external environment was characterised by heightened uncertainty about the growth prospects of emerging market economies, volatility in the financial and commodity markets and geopolitical risks. In this environment, euro area inflation dynamics had continued to be weaker than expected.”
In December, ECB president Mario Draghi announced its quantitative easing programme would be extended beyond September this year to March 2017 “or beyond if necessary”.
But the governing council did not take any action in January, as they indicated they wanted to wait for further data to become available.
It added: “In the light of prevailing uncertainties and volatility, members considered it premature to conclude on policy action at the current meeting and to discuss precise policy options that could be taken, if needed.
“Instead, further thorough analysis was required by early March when the new macroeconomic projections, including those for 2018, and an updated quarterly monetary assessment would be available from staff.”
The members also discussed “appropriate communication” in order to avoid markets developing “excessive expectations” about future policy action, “bearing in mind the market volatility experienced around the December 2015 monetary policy meeting”.