The shift in outlook, which policymakers said had clearly “moved to the downside”, comes just six weeks after the ECB removed the most important element of its crisis-era stimulus, halting new purchases of bonds as part of its €2.6tn quantitative easing programme.
“We were unanimous about acknowledging the weaker momentum and changing the balance of risk for growth,” said Mario Draghi, ECB president.
The new guidance, which the ECB said had not yet trigger a change in monetary policy, came amid mounting signs of economic trouble across the eurozone.
A monthly poll of purchasing managers, a key gauge of business activity, fell to its lowest levels since the eurozone debt crisis in January.
In Germany, a separate gauge for manufacturers fell just below the threshold of 50 that separates expansion from contraction and fell far short of a score of 51.3 expected by economists in a Reuters poll, highlighting the damage wrought by trade tensions on Europe’s largest exporter.
The shift in global economic sentiment triggered by the US-China trade war and investor nervousness over the rising cost of borrowing has presented a quandary for all the world’s largest central banks, which have spent much of the last two years slowly unwinding cheap money policies implemented during the financial crisis.
The US Federal Reserve signalled it was slowing the pace of rate increases last month for similar reasons to those cited by the ECB, and the Bank of England has not tightened monetary policy since August amid mounting fears of a disorderly Brexit.
Although there was no change in policy at Thursday’s ECB meeting, Mr Draghi signalled the bank would react should the data continue to disappoint. [...]
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