The ECB's chief economist Peter Praet recently crossed the wires saying that the ECB could adopt rate guidance if the economy were to slow sharply.

Key quotes (via Reuters)

  • What counts for us is medium-term and we see positive and negative factors there.
  • A rebound is likely, but it is too early to say by how much.
  • Biggest problem by far is political uncertainties persisting for so long, related to protectionism, Brexit.
  • Question is how financial sector would react; there's risk banks could act even more pro-cyclically than usual.
  • TLTROs have been a very useful tool to deal with impairments in transmission of monetary policy, are part of toolbox.
  • We do need to monitor the transmission of monetary policy through banking system carefully.
  • If euro area economy were to slow more sharply, we could adapt guidance on rates, complemented by other measures.
  • Further asset purchases may not be needed at all to ensure that financing conditions are appropriate.
  • It may make sense for ECB to review overall mon pol framework in future, now may not be right time.