The European Central Bank (ECB) made no changes to its monetary policy at its rate-setting meeting on Thursday, but suggested that a package of easing measures could come before year end.
Unusually, the Governing Council opened its press release by acknowledging the perilous state of the eurozone economy: “In the current environment of risks clearly titled to the downside, the Governing Council will carefully assess the incoming information, including the dynamics of the pandemic.”
Typically, rate announcements are prefaced with sparse language, such as: “At today’s meeting, the Governing Council of the ECB took the following monetary policy decisions.”
ECB staff will update their forecasts ahead of the December Governing Council meeting, and the ECB dropped heavy hints that policy could be adjusted at the final meeting of the year. “On the basis of this updated assessment, the Governing Council will recalibrate its instruments, as appropriate, to respond to the unfolding situation.”
The Bank’s main deposit facility remains at -0.5%, while the Council will continue quantitative easing under its €1.35 billion Pandemic Emergency Purchase Programme.
The nascent eurozone summer recovery appears to have come to halt, with the European Commission’s service-sector confidence index falling to -11.8 in October from -11.2 in September, the first decline since the spring. Meanwhile, the eurozone’s biggest economies, Germany and France, have announced national lockdowns over the past 24 hours, which could further damage the service sector in both nations.