In the accounts of ECB January 22-23 meeting, it’s noted that the package of stimulus measures announced last September “have lowered term premia and contributed to the overall substantial easing in financial conditions.” There were also “indications” that the package was “being gradually transmitted to the economy”.
“Market sentiment had turned positive and risk appetite among market participants seemed strong.” Additionally, “uncertainties were perceived as receding”, mainly due to US-China trade deal and stabilization in economy outlook. But monetary policy “had to remain highly accommodative for a prolonged period of time”, with inflation “still far away” from target, and “robust convergence” of inflation towards target was “not yet assured”.
Meanwhile, “risks remained tilted to the downside” even though they had become “less pronounced”. Also, “it was cautioned that a more optimistic outlook for the economy needed to be communicated carefully in order not to give rise to a premature tightening of financial conditions.”
