European Central Bank policymakers are likely to explore the unconventional policy of granting cheap long-term loans to banks in the coming months as they chose to adopt a cautious stance towards terming the risks to the euro area economic outlook as "downside", minutes from December policy session showed on Thursday.
Following the December 12-13 Governing Council session, the ECB confirmed that it is ending its massive EUR 2.3 trillion asset purchase programme in December and trimmed the growth and inflation projections for this year.
ECB President Mario Draghi said the risks surrounding the euro area growth outlook were still "broadly balanced", but "the balance of risks is moving to the downside", owing to geopolitical uncertainties, protectionist threats, emerging market vulnerabilities and financial market volatility.
"It was underlined that the situation remained fragile and fluid, as risks could quickly regain prominence or new uncertainties could emerge," the minutes said.
However, some members cited the emergence of new upside risks and said the recent negative news have been factored into the downward revision of the staff projection.
"Against this background, caution was expressed against moving the balance of risks to the downside," the minutes said.
Members agreed that the current assessment of risks being "broadly balanced" struck the necessary balance between confidence in the medium-term outlook and acknowledgment of the recent weakness in data and indicators.
"Looking ahead, the suggestion was made to revisit the contribution of targeted longer-term refinancing operations to the monetary policy stance," the minutes said.
Under TLTRO, the ECB gives longer-term loans to financial institutions at attractive rates to boost lending in the real economy.
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