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ECB stimulus decision depends on long-term trends: Mersch
[FRANKFURT] The European Central Bank will decide in early December whether to loosen monetary policy further and will contemplate long-term trends rather than short-term indicators, Executive Board member Yves Mersch told the French newspaper Les Echos on Sunday. "Inflation is expected to rise again at the beginning of next year owing to base effects on energy prices," Mersch said."However, analysts shouldn't focus so much on short-term data or on certain inflation expectations indices. Our approach is more holistic." The ECB has said it will decide at its Dec 3 meeting whether it needs to loosen policy to kick-start inflation. It has said an expansion of its 60 billion euro per month asset buying programme and a deposit rate cut are among options under discussion.
Mersch said cutting the deposit rate further into negative territory was a possibility, with both negative and positive consequences.
The rate cut could weaken the euro, which could boost both inflation and growth, but influencing the exchange rate was not a policy objective, even though the currency was a key policy transmission channel.