2015 was a year of recovery for the euro area economy. Inflation, however, remained on a downward path. Against this backdrop, a key theme for the euro area in 2015 was strengthening confidence. Confidence among consumers to boost spending. Confidence among firms to resume hiring and investing. And confidence among banks to increase lending. This was essential to nurture the recovery and underpin the return of inflation towards our objective of below, but close to, 2%.
As the year progressed, we did indeed see confidence firming. Domestic demand replaced external demand as the motor of growth on the back of rising consumer confidence. Credit dynamics began recovering for the euro area as a whole. Employment continued to pick up. And fears of deflation, which had stalked the euro area in early 2015, were dispelled entirely.
As we describe in this year’s Annual Report, the ECB contributed to that improving environment in two main ways.
The first and most important was through our monetary policy decisions. We took action decisively throughout the year to ward off threats to price stability and ensure the anchoring of inflation expectations. That began in January, with our decision to expand our asset purchase programme (APP). It continued with the various adjustments to the programme throughout the year, such as the expansion of the list of issuers whose securities are eligible for purchase. And it concluded with our decisions in December to cut our deposit facility rate further into negative territory and to recalibrate our asset purchases.
These measures proved effective. [...]