CERNOBBIO, Italy, Sept 5 (Reuters) - The aim of the European Central Bank’s programme to buy securitised loans on top of its long-term loan scheme is to make sure the easing impact is “sizeable” regardless of banks’ appetite for new loans, ECB Executive Board member Peter Praet said on Friday.
The ECB cut interest rates almost to zero on Thursday and pledged to buy asset-backed securities on top of its four-year loan offer, or TLTROs, in a fresh attempt to stabilise inflation expectations and boost recovery.
“The ECB aims for an easing impact that is more certain and less dependent on the borrowing behaviour of banks,” said Praet, who is in charge of the ECB’s economics portfolio, on the sidelines of the Ambrosetti forum in Cernobbio.
“What is clear here is that there is a commitment to have a sizable easing impact,” he added.
The ECB said banks could borrow up to 400 billion euros in four-year loans at ultra-low rates of 0.15 percent in two offerings in September and December and even more if they keep lending to households and companies.
ECB President Mario Draghi said during his post-policy meeting news conference that the aim was to bring the ECB’s balance sheet back to early 2012 levels, around 3 trillion euros with the TLTROs and the new ABS and covered bond programme.
Its balance sheet now stands at around 2 trillion euros.
Praet said “there was a respectful discussion” in the Governing Council on the September decisions. “The discussion was very rich, but not conflictual,” he added.
Draghi said that the decision to cut interest rates further had not been unanimous and that there had been a “comfortable” majority for the new ABS purchase programme.
Praet said: “There were differing degrees of concern, on timing for action and on scope. Some people were arguing that we should wait a little bit longer. But I would say that the final statement was very well supported.”
The 24-member Council was “unanimous to recognize that the signals of recent data are a matter of concern”, Praet added.
The euro zone economy ground to a halt in the second quarter and inflation hit 0.3 percent in August, a far cry from the ECB’s medium-term target of just below 2 percent.
“When you see signs of weakening in an anyway fragile environment, you need to make sure you don’t find yourselves behind the curve,” Praet said. (Writing by Eva Taylor; editing by Andrew Roche)