ECB hikes growth forecasts but admits losses on Steinhoff bonds – as it happened

Time for a recap.

The European Central Bank has hiked its growth forecasts, but admitted that inflation still won’t be on target by 2020.

In its final meeting of 2017, the eurozone’s central bank voted to leave interest rates on hold – and repeated its commitment to running an asset-purchase stimulus programme until at least next September.

Playing his cards close to his chest, president Mario Draghi batted away questions on whether the stimulus programme would continue at a slower rate beyond September 2018, or come to an abrupt halt.

Draghi also admitted that the ECB has incurred losses on corporate bonds issued by troubled retailer Steinhoff. Those bonds have plunged in value since the company announced accounting problems, and the departure of its CEO.

Reuters has a good take:

“Running such big corporate programmes it is not unusual that losses may be happening,” he told a news conference after the bank left benchmark interest rates and the terms of the asset purchase scheme unchanged.

The ECB’s rules only allow it to own debt as part of its asset-buying programme, which means it might have to sell its Steinhoff holding if the bonds were converted to equity.

Draghi said the ECB had stopped buying the bonds as soon as the firm’s troubles emerged, and its losses from the purchases had been “by and large exaggerated by a factor of 10.”

He said policymakers were discussing the issue but “I cannot elaborate a lot about what we are going to do next.”

(@Richards_Karin)

Draghi forced to defend ECB’s buying of Steinhoff bonds.”Will draw lessons from Steinhoff experience.””As soon as we got news of Steinhoff scandal we stopped buying the bond.””Losses reported in the media exaggerated by a factor of 10.”~via fxstreet

That’s probably all for today. Thanks for reading and commenting. GW

Draghi says the ECB hasn’t discussed whether it should bring its bond-buying programme to an abrupt stop next September, or simply continue at a slower rate.

(@AxelMerk)

Draghi walks back his sudden stop denial he mentioned last press conf, now says they have not discussed QE after September 2018, meaning it may very well be cut to zero