European Central Bank holds off on strengthening stimulus

FRANKFURT, Germany (AP) — The European Central Bank held off from strengthening its stimulus programs despite growing concern that a renewed surge in COVID-19 cases could stall the economy’s recovery from the deep downturn in the first part of the year, and even as analysts forecast that the bank will eventually take further action.

But the ECB signaled that more stimulus could be coming at its December meeting, given that risks are “clearly tilted to the downside” and new staff projections would make possible “a thorough reassessment.”

The bank made no change to its 1.35 trillion ($1.58 trillion) pandemic emergency bond purchase program, which pumps newly created money into the economy to keep credit flowing to businesses and promote economic activity. Those regular purchases are set to run through the middle of next year. Analysts say that is one reason the bank is holding off increasing the amount, since there is plenty of stimulus still in the pipeline.

The ECB’s key goal is to raise inflation toward its target of below but close to 2%, the level considered best for the economy. Inflation was minus 0.3% in September, partly a result of temporary measures such as a value-added tax cut in Germany but also a sign of weaker than optimal demand.

Economy output plunged 11.8% in the 19 countries that use the euro in the second quarter but is estimated to have rebounded in the July-September months by as much as 10% as businesses reopened. Figures for the quarter are to be released Friday.

Europe has been in part sustained by business ties between Germany, its largest economy, and China, where the pandemic hit earlier but has been largely contained, allowing activity to rebound to near normal levels. German auto maker Volkswagen said Thursday it had increased sales in China by 3% in the third quarter over...