FX.co ★ ECB to extend its bond-buying program

Speaking at the 26th European Banking Congress in Frankfurt, European Central Bank President Mario Draghi hinted that the ECB will extend its bond-purchase program next month, warning that the eurozone’s weak economy remains heavily reliant on the ECB’s stimulus.

The ECB does not “yet see a consistent strengthening of underlying price dynamics. Even if there are many encouraging trends in the euro area economy, the recovery remains highly reliant on a constellation of financing conditions that, in turn, depend on continued monetary support," Draghi said.

The statement suggests that the central bank's balance sheet – currently at 3.5 trillion euros and with more being added every month – will not contract in the near future, even if some parameters of the ECB’s quantitative easing change.

The ECB policymakers will meet on December 8 to decide whether to extend their bond-purchase program, which is due to end in March 2017.

The ECB is purchasing €80 billion of bonds a month to reduce interest rates across the eurozone aiming to boost lending, growth and inflation. However, despite the central bank's efforts, inflation was only 0.5% last month, instead of the ECB's target of just below 2%.