Wary ECB decides to buy fewer bonds, but do it for longer

ECB president Mario Draghi

ECB president Mario Draghi

The main intend behind the ECB's move on Thursday is to push back expectations for the first rate rise in the eurozone to at least the first quarter of 2019.

The European Central Bank says it will cut its bond purchases to 30 billion euros per month from 60 billion euros now, starting in January.

Both the US Federal Reserve and UK's Bank of England began money printing - which involves buying bonds from government and institutions - soon after the financial crisis in 2009, which led to a faster recovery in both regions.

The Governing Council reiterated that it will continue to spend 60 billion euros a month on debt until the end of December.

"From January 2018 the net asset purchases are meant to continue at a monthly pace of €30 billion until the end of September 2018, or beyond, if necessary", the European Central Bank says in its latest monetary policy decision.

The ECB is expected to announce an end to quantitative easing (QE), or money printing, today as bank President Mario Draghi steps up to deliver the final act of his career before retiring next October.

Steady growth has enabled the European Central Bank to look toward phasing out extraordinary stimulus measures, in hopes that higher wages will eventually push inflation from 1.5 percent to its goal of just under 2 percent.

"Domestic price pressures are still muted overall and the economic outlook and the path of inflation remain conditional on continued support from monetary policy", he said.

The ECB said it could extend the purchases beyond September "if necessary", and that if conditions deteriorated, it stood ready to increase the size of the program in terms of size and/or duration.

The ECB only has one meeting left this year.

It also said present interest rates could stay at that level "well beyond" the QE "horizon".

The decisions could be outlined in a statement, followed by a fuller explanation in a news conference.

Banks are better capitalised, lending is growing, and divergence between the core and the periphery, the biggest failure of the currency project, appears to have halted.

Hawks such as Germany and the Netherlands have wanted a commitment to end bond buys, arguing that growth is now above trend and that more purchases do next to nothing for inflation.

The ECB also said it was leaving its benchmark interest rates unchanged.

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