ecb set to tee up next stimulus move
Tuesday 4 March 2025
Last Updated : GMT 05:17:37
Emiratesvoice, emirates voice

ECB set to tee up next stimulus move

Emiratesvoice, emirates voice

Emiratesvoice, emirates voice ECB set to tee up next stimulus move

ECB policymakers are not expected to make changes
Frankfurt - AFP

ECB chief Mario Draghi is likely to prep markets for an extension of a huge monetary stimulus programme Thursday after investors were rattled by talk that massive bond purchases may be drying up.

Policymakers at the European Central Bank are not expected to make changes to the bank's record low interest rates, cheap loans to banks, or 80-billion-euro-per-month asset-buying programme at this week's governing council meeting.

But markets will be watching Draghi's news conference closely for signs of its next moves to support hesitant growth and inflation in the eurozone single currency area.

Investors were spooked by a Bloomberg report in early October suggesting that the ECB was considering "tapering" -- or gradually phasing out -- its "quantitative easing" asset-buying scheme which is due to end in March.

While the bank strongly denied the report, the ensuing "taper tantrum" pushed up bond yields and served as a reminder of how volatile sentiment regarding the currency bloc's prospects remains.

With little sign of governments responding to Draghi's repeated calls to use growth-boosting fiscal policies to complement his monetary interventions, the ECB's ultra-loose policy remains a critical pillar of confidence in the 19-nation eurozone.

"It is too soon for the ECB to provide any guidance on its exit strategy," economist Florian Hense of Berenberg bank said, as it "wants markets to focus on a likely extension of its purchase programme".

-Decision in December-

Most central bank observers expect Draghi to hold off until December to announce any policy changes aimed at bringing inflation closer to the ECB's mandated target.

Inflation reached its highest level in almost two years in September, at 0.4 percent, but remains far off the ECB's objective of just below 2.0 percent.

But the bank believes that without its help, economic performance would be even worse.

Minutes released in early October from September's governing council meeting showed members agreed it was "of crucial importance to preserve the very substantial degree of monetary support" -- and little has changed since then.

A study the ECB released this week showed increased demand for credit from businesses and households and banks softening conditions for offering loans and for their repayment -- positive developments which the council will see as the result of its interventions.

"We think the ECB will likely act again in December, when it has new staff projections to hand" of future growth and inflation, Morgan Stanley analyst Elga Bartsch said.

Rather than announcing changes, Draghi "should make clear that the ECB is still willing, able and ready to intervene again if necessary", a mantra he has stuck to at recent press conferences, Natixis bank economist Johannes Gareis said.

In September, the governing council tasked "relevant committees" to examine ways the ECB can avoid running out of bonds to buy, allowing it to continue pumping money into the financial system and encouraging lending.

Its own rules prevent the ECB from buying bonds with a yield below the rate of interest it pays on deposits, currently -0.4 percent, and from buying too many from any one issuer -- a bulwark against potential accusations of "monetary financing" of government spending.

Loosening those rules could be a sign the bank is giving itself space to continue quantitative easing by making more bonds eligible to buy.

-Bumpy road ahead-

With several potential political upsets on the calendar in November, including the US presidential election and a constitutional referendum in Italy which Prime Minister Matteo Renzi has staked his job on winning, analysts expect the ECB will want to conserve its strength for now.

Meanwhile, financial markets are eyeing the possibility of the US Federal Reserve raising its own interest rates, potentially driving up yields on European bonds.

And lurking in the background is the as-yet-unquantifiable damage to eurozone economies from Brexit.

The island nation was the eurozone's second-largest export customer after the United States in 2015, according to Eurostat data, buying 13.5 percent of the currency bloc's goods sold abroad.

Source: AFP

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

ecb set to tee up next stimulus move ecb set to tee up next stimulus move

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

ecb set to tee up next stimulus move ecb set to tee up next stimulus move

 



GMT 19:57 2018 Tuesday ,23 January

Farm-fresh from Kerala to the UAE, in just one day

GMT 10:08 2018 Wednesday ,24 January

Microsoft to open 4 data centres

GMT 14:45 2017 Wednesday ,22 February

You can enhance your brain

GMT 06:11 2017 Thursday ,23 February

Football: Turkish company wins Qatar World Cup contract

GMT 07:50 2017 Thursday ,03 August

Afghan women launches "Where is my name?"

GMT 10:06 2018 Wednesday ,10 January

Children dead in Syria bombardments

GMT 15:02 2016 Saturday ,17 December

Diamonds reveal secrets deep down below Earth surface

GMT 11:11 2017 Tuesday ,14 November

HRH Premier's patronage of Invest-in-Bahrain hailed

GMT 12:50 2017 Saturday ,18 March

Moroccan politician expresses respect to former PM

GMT 00:46 2017 Wednesday ,04 October

Several Saudi-paid mercenaries killed in Jawf

GMT 17:52 2017 Tuesday ,14 March

Libya strongman launches assault on oil terminals

GMT 10:05 2014 Sunday ,28 September

Research shows meditation may mitigate migraine pain

GMT 09:51 2017 Wednesday ,27 December

Briton sentenced to 3 years in Egypt
 
 Emirates Voice Facebook,emirates voice facebook  Emirates Voice Twitter,emirates voice twitter Emirates Voice Rss,emirates voice rss  Emirates Voice Youtube,emirates voice youtube  Emirates Voice Youtube,emirates voice youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

emiratesvoieen emiratesvoiceen emiratesvoiceen emiratesvoiceen
emiratesvoice emiratesvoice emiratesvoice
emiratesvoice
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
emiratesvoice, Emiratesvoice, Emiratesvoice