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ECB Minutes Reveal Members Slightly Optimistic On Economic Outlook

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European Central Bank policymakers revealed mild optimism regarding the euro area economic outlook in December and said existing stimulus measures must be given more time to exert themselves on the economy.

That said, the Governing Council members stressed for the need to remain attentive to the possible side effects of the present policy measures, the minutes, which the ECB calls "account", of the December 11-12 policy session revealed on Thursday.

The ECB Governing Council decided to leave the interest rates, asset purchases and forward guidance unchanged as policymakers waited for September's stimulus measures to have an effect on the euro area economy.

The December meeting was the first to be chaired by the new ECB President Christine Lagarde.

Citing incoming data, the ECB policymakers said the economic activity remained weak, but there were signs of stabilization in the growth slowdown.

"Inflation developments had remained subdued overall, although there were some indications of a slight increase in measures of underlying inflation in line with previous expectations," the minutes said.

Policymakers reiterated the need for a highly accommodative monetary policy stance for a prolonged period of time, the minutes added.

"While vigilance on the efficacy of the policy measures and the appropriateness of the monetary policy stance was called for, it was highlighted that the measures should be given time to exert their full impact on the euro area economy," the ECB said.

Regarding the adverse effects of negative interest rates, policymakers said the overall effects on bank profitability had remained positive.

Citing the improvement in the credit conditions in the euro area, policymakers were confident that policy rates had not yet reached the so-called reversal rate.

Members also suggested that some broad guidance on the upcoming strategic review must be communicated.

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