European Central Bank keeps interest rates at record lows

European Central Bank members are all prepared to take more policy action if necessary and the
bank's staff will prepare the groundwork in case, President Mario Draghi said on Thursday. The
ECB kept interest rates at a record low 0.05 percent at it monthly meeting, waiting to see how
stimulus measures laid out in recent months unfold.
Draghi said risks to the euro zone's recovery remained skewed to the downside and told a news
conference: "The Governing Council is unanimous in its commitment to using additional
unconventional instruments within its mandate. "The Governing Council has tasked ECB staff
and the relevant Eurosystem (central bank) committees with ensuring the timely preparation of
further measures to be implemented if needed," he said.
After the US Federal Reserve ended its bond-buying programme while the Bank of Japan
increased its pace money creation, markets are trying to judge how close the ECB is to launching
more aggressive steps, such as quantitative easing money-printing to buy large amounts of
government bonds. There has been mounting discomfort over Draghi's leadership style.
Reuters reported on Tuesday national central bankers in the euro area planned to challenge
Draghi over his communication style and in particular his mention of a balance sheet target for
how much money the ECB planned to pump into the economy after the Governing Council
agreed not to make any figure public in September. Draghi reaffirmed that target, saying the balance sheet would "move towards the dimensions it had at the beginning of 2012". He added
that the policymaking Governing Council had signed up to that unanimously but nodded to some
policy differences.
"When we differ in our views and our policies ... there is no drawing of a line between North and
South. There is no coalition, not at all," Draghi said. "The dinner (before Thursday's meeting)
went better than expected," Draghi said. The euro hit a 26-month low and peripheral European
bond yields fell after he affirmed the target and highlighted risks to economic growth.
To keep the euro zone from slipping into deflation, the ECB has started pumping more money
into the banking system through purchases of private debt and offers of long-term loans, aiming
to boost its balance sheet by up to 1 trillion euros. There is growing doubt whether its current
measures will be enough, but the ECB is expected to wait until it gets a clearer view of the
impact of its asset purchases and four-year loans to banks before adding further stimulus.
Sources close to the ECB have told Reuters that its plan to buy private-sector assets may fall
short of its goal and pressure is likely to build for bolder action early next year, firstly moving
into the corporate bond market.