Eurozone

ECB must stay 'patient and persistent' on policy, Praet says

Peter Praet, a member of the ECB's executive board
Peter Praet, a member of the ECB's executive board
Photo: AFP

The European Central Bank must remain "patient and persistent" in its use of monetary policy to bring eurozone inflation up to its target of below, but close to 2%, Peter Praet, a member of the bank's executive board, said.

The ECB's rate-setting Governing Council decided on September 7 that the bank's asset purchases, now running at €60 billion a month, will continue until the end of December, "or beyond, if necessary" and in any case until there is a "sustained adjustment" in inflation.

"Patience is required for inflationary pressures to show through convincingly in the data," Praet said in remarks on Wednesday and put out in a statement by the ECB. "We must also be persistent with the use of our policy instruments to ensure a durable and self-sustained return of inflation."

Consumer prices across the 19-nation eurozone increased 1.5% in August, quickening from 1.3% in July. To get that figure higher the ECB buys bonds from banks through a programme called quantitative easing. 

That brings money into the financial system and takes interest rates down. 

Consumers and businesses can thereby borrow more at lower costs, and their spending and investments should increase. That, according to the ECB, should take inflation nearer to 2%.

"Maintaining a steady hand continues to be critical to fostering a durable convergence of inflation towards our monetary policy objective," Praet said.

(Alistair Holloway, alistair.holloway@wort.lu, +352 49 93 739)   

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