Excerpts from the Account of the monetary policy meeting of the Governing Council of the European Central Bank, held in Frankfurt am Main on 2-3 September 2015:
Real GDP growth in the second quarter of 2015 had been weaker than expected, while recent economic data, including survey evidence available up to August, were seen as broadly consistent with a continued moderate economic recovery in the euro area. However, the recovery was now expected to proceed at a somewhat weaker pace than previously anticipated. While domestic demand in the euro area appeared to be relatively resilient, since the Governing Council meeting in mid-July some further weakness had been evident in the international environment. The slowdown in activity in emerging market economies, in particular, was weighing on global growth and trade, leading to lower growth in foreign demand for euro area exports.
It was noted that a slowdown in the growth of world trade had been observed for some time, with signs of a lower trade elasticity of global growth possibly pointing to a structural change since the onset of the financial crisis. It was therefore likely that the recent slowdown reflected a combination of both structural and cyclical factors. In addition, uncertainty arising from developments in economic and financial conditions in emerging market economies, particularly China, had clearly increased. It was emphasised that the interpretation of the latest developments in China was very challenging, and more time and analysis were needed to better understand these developments and their implications for the euro area from a medium-term perspective.
All in all, it was considered too early to say whether recent external developments would have a material effect on the euro area, but the downside risks had clearly increased and there was a need to carefully monitor developments and policies outside the euro area.
Taking into account the views expressed by the Governing Council, the President concluded that it remained premature to judge whether recent developments would have a lasting impact on the medium-term outlook for price stability. Accordingly, close monitoring of all relevant information was warranted. At the same time, the Governing Council remained willing and able to act, if necessary, by using all available tools within its mandate, including the flexibility of its asset purchase programmes in terms of adjusting their size, composition and duration. There was also wide agreement for stressing that the monthly asset purchases of €60 billion would be fully implemented until the end of September 2016, and beyond, if necessary, and, in any case, until a sustained adjustment in the path of inflation, consistent with the Governing Council’s aim of achieving inflation rates below, but close to, 2% over the medium term, was visible.
Taking into account the foregoing discussion among the members and on a proposal from the President, the Governing Council decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility would remain unchanged at 0.05%, 0.30% and -0.20% respectively