European Central Bank policymakers widely agreed that it was better to wait until December to get a clearer picture of the inflation outlook to form a policy view, minutes of the October rate-setting session showed Thursday.
"There was wide agreement among members that it was premature to make a firm assessment of the outlook for price stability and to discuss its implications for the monetary policy stance at the current meeting," the report, which the ECB calls "account" said.
The Governing Council meeting was held on October 19-20. The central bank maintained status quo for a fifth straight session.
While the Eurozone economic recovery remained on track, underlying inflation lacked a convincing upward trend, and outlook for both were based on the easy financing conditions, the bank noted.
"In this context, it was recalled that patience continued to be warranted as the full effects of the monetary policy measures were still unfolding, given the transmission lags with which policy was feeding through to the ultimate objective, and which, in the wake of private and public sector balance sheet adjustments, were likely to be longer than usual," the report said.
"Members widely agreed that in December the Governing Council would be in a better position to form a firmer view on the inflation outlook and the progress being made in achieving a sustained adjustment in the path of inflation, with a view to considering the appropriate implications for the monetary policy stance."
Policymakers also widely shared the view that a discussion on the changes to the technicalities of the asset purchase programme should not be separate from an assessment of the medium-term inflation outlook and the implications this might have for the appropriate monetary policy stance.
Further, they felt they will be better equipped to decide in December when they will receive the new set of ECB Staff macroeconomic projections that will also have forecast for 2019 for the first time.
Rate-setters will also be presented with the results of the work of the Eurosystem committees on the options to ensure the smooth implementation of the APP until March 2017, or beyond, if necessary.
"All in all, members widely shared the view that it was imperative to remain fully committed to preserving the very substantial degree of monetary accommodation that was necessary to secure a sustained convergence of inflation towards levels below, but close to, 2 percent over the medium term," the minutes said.
Though the ECB is widely expected to extend its monthly asset purchases of EUR 80 billion beyond March 2017, the result of the US election and the consequent surge in bond yields have complicated the outlook.
The next ECB rate-setting session is scheduled for December 8.
Earlier on Thursday, ECB Executive Board member Yves Mersch said stimulus measures adopted by the ECB are not free from side-effects in the long run and must be withdrawn as soon as possible, though it may take some time due to the huge volume of asset purchases.
"The latest ECB minutes suggest that, in contrast to today's hawkish speech from Yves Mersch, the Governing Council as a whole favors maintaining the current degree of policy stimulus for some time to come," Capital Economics economist Jennifer McKeown said.
"On balance, then, we still expect the ECB to announce a six-month extension of its Asset Purchase Programme, probably at the current pace, at its next meeting on 8th December."
The bank may also indicate that it would be willing to buy more than 33 percent of highly-rated governments' debt or to buy bonds with yields below the deposit rate if required to carry out those plans, the economist added.
by RTT Staff Writer
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