FRANKFURT, Aug. 22 (Xinhua) -- As the economic slowdown in the euro area is likely to be more protracted than previously thought, the European Central Bank (ECB) is eyeing a possible policy package of "instruments with significant complementarities and synergies," according to the minutes of the bank's July policy meeting published Thursday.
In light of recent data mostly pointing to the soft side, the ECB noted an increased likelihood that the economic slowdown that had emerged last year in the euro zone would be "more protracted than had previously been anticipated."
In contrast to its June projections, growth in the third quarter of 2019 may be slower, raising doubts over the expected recovery in the second half of the year, the ECB said, while noting "unchanged positive fundamentals," such as those related to favorable financing conditions or the income growth.
Some policymakers were also worried about spillovers from the weakening in the manufacturing sector to the services and construction sectors currently showing resilience.
After its July policy meeting, the ECB kept its key interest rates unchanged but slightly adjusted its forward guidance, saying it expects the key interest rates to remain "at their present or lower levels at least through the first half of 2020", opening doors for policy easing.
It also tasked relevant Eurosystem Committees with examining options, including ways to reinforce the forward guidance on policy rates, mitigating measures, such as the design of a tiered system for reserve remuneration, and options for the size and composition of potential new net asset purchases.
"The view was expressed that the various options should be seen as a package, i.e. a combination of instruments with significant complementarities and synergies, since experience had shown that a policy package -- such as the combination of rate cuts and asset purchases -- was more effective than a sequence of selective actions," the ECB said Thursday.
The bank also noted the need for a careful balance between "giving unduly negative signals" about the state of the economy and "effectively counteracting the concern" that it lacked the necessary instruments to deliver its inflation aim.
The next ECB monetary policy meeting is scheduled for September 12.
