ecb set to tee up next stimulus move
Last Updated : GMT 09:07:40
Egypt Today, egypt today
Egypt Today, egypt today
Last Updated : GMT 09:07:40
Egypt Today, egypt today

ECB set to tee up next stimulus move

Egypt Today, egypt today

Egypt Today, egypt today 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

egypttoday
egypttoday

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 15:49 2011 Friday ,10 June

Oil firm wins injunction against Greenpeace

GMT 10:27 2015 Monday ,06 July

Mini to launch ‘Clubman’ in 2016

GMT 17:21 2011 Wednesday ,23 February

Lampard Desperate To Win The Champions League

GMT 10:13 2018 Tuesday ,09 January

Barcelona to unveil 160m Coutinho

GMT 23:03 2017 Monday ,16 January

Bank of Korea: Money Production Cost Rise in 2016

GMT 20:33 2011 Friday ,06 May

Asad\'s army arrests all men over 15 in Daraa

GMT 11:55 2011 Tuesday ,29 November

Ultrabooks could save the PC

GMT 13:02 2012 Saturday ,01 September

Zombies and Morons compete

GMT 07:31 2017 Tuesday ,20 June

Sisi keen on attaining unity

GMT 11:50 2015 Saturday ,26 September

The Library of Fragrance announces January launches

GMT 06:28 2014 Saturday ,18 October

Asian Junior Volleyball tourney kicks off in Bahrain
 
 Egypt Today Facebook,egypt today facebook  Egypt Today Twitter,egypt today twitter Egypt Today Rss,egypt today rss  Egypt Today Youtube,egypt today youtube  Egypt Today Youtube,egypt today 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 ©

egypttoday egypttoday egypttoday egypttoday
egypttoday egypttoday egypttoday
egypttoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
egypttoday, Egypttoday, Egypttoday