Europe's central banker: Not adding to pinch with rate hike
Those include high oil and gas prices and shortages of raw materials and parts as businesses struggle to meet stronger demand for goods. Central banks typically raise interest rates to cool off larger-than-desired price increases, leading to higher mortgage payments and more expensive loans. Lagarde said recently higher oil and gas prices would weigh more on consumer spending in the eurozone than in other major economies because Europe is an energy importer. She said raising rates or cutting other stimulus efforts now would only increase the squeeze on household incomes from inflation. Annual inflation hit 4.1% in October, the highest since 2008, with 2.2 percentage points of that from energy prices.wftv.com
European Central Bank leaves pandemic stimulus unchanged
Europe Economy FILE - In this June 25, 2021 file photo, European Central Bank President Christine Lagarde arrives for an EU summit at the European Council building in Brussels. The European Central Bank is facing the highest inflation in more than a decade and slowing business activity as it decides on monetary policy for the 19 countries using the euro. (AP Photo/Olivier Matthys, Pool) (Olivier Matthys)FRANKFURT, Germany — (AP) — The European Central Bank has decided to keep its pandemic stimulus efforts unchanged even as consumer prices spike and central banks in other parts of the world look to dial back support as their economies bounce back from the worst of the COVID-19 outbreak. FRANKFURT, Germany (AP) — European Central Bank officials are confronting the highest inflation in more than a decade and supply shortages that are holding back the pandemic recovery as they decide monetary policy Thursday for the 19 European Union countries that use the euro currency. That means the European Central Bank can “ride out" rising prices and slower growth "more easily than the Fed,” he said.wftv.com
Burst of rising prices tests European Central Bank
Europe Economy FILE - In this June 25, 2021 file photo, European Central Bank President Christine Lagarde arrives for an EU summit at the European Council building in Brussels. The European Central Bank is facing the highest inflation in more than a decade and slowing business activity as it decides on monetary policy for the 19 countries using the euro. Central banks typically respond to higher-than-desired inflation by raising interest rates, tightening credit in the economy and cooling off demand that drives prices higher. That means the European Central Bank can “ride out" rising prices and slower growth "more easily than the Fed,” he said. The rate for European Central Bank lending to banks is zero, while the rate on deposits left overnight by banks is minus 0.5%, meaning banks pay to deposit the money — a penalty rate aimed at pushing them to lend the funds instead.wftv.com
European Central Bank keeps pandemic support going
The European Central Bank has decided to keep its pandemic stimulus efforts unchanged even as consumer prices spike and central banks in other parts of the world look to dial back support as their economies bounce back from the worst of the COVID-19 outbreak.
European Central Bank won't overreact to fleeting inflation
Germany European Central Bank Lagarde FILE - In this Jan.23, 2020 file photo President of European Central Bank Christine Lagarde smiles prior to a press conference following a meeting of the governing council in Frankfurt, Germany. (AP Photo/Michael Probst, file) (Michael Probst)FRANKFURT, Germany — (AP) — Europe's current burst of inflation is temporary and won't lead the European Central Bank to “overreact” by withdrawing stimulus or raising interest rates, ECB President Christine Lagarde said Tuesday. “What we are seeing now is mostly a phase of temporary inflation linked to reopening,” Lagarde said in a speech in Frankfurt, Germany opening the ECB's annual forum on central banking. While longer-term forces could push inflation higher or lower, Lagarde was clear that the current round of higher readings would not budge the bank off its stimulus posture. The ECB now thinks the economy will regain its pre-COVID-19 size by the end of this year, three quarters earlier than the bank predicted in December.wftv.com
Europe's central bank eases support, but it's not a taper
The European Central Bank’s governing council meets Thursday, Sept. 9, 2021 to decide monetary policy for the 19 countries that use the euro. Analysts say the central bank may ease back on its support for the economy against a background of improving economic activity. (AP Photo/Michael Probst, file) (Michael Probst)FRANKFURT, Germany — (AP) — The European Central Bank will dial back some of its massive emergency pandemic support for the economy. The bank said Thursday that it could conduct its bond purchase stimulus at “a moderately lower pace” than in recent months. The U.S. Federal Reserve has already indicated it is moving toward scaling back its bond purchase stimulus by year end.wftv.com
Europe leaves stimulus running hot ahead of recovery
That mirrored language from its last meeting on April 22, changed only to extend the higher pace of purchases by a quarter. Analysts say she will likely avoid any talk of a stimulus taper because that could send market borrowing costs higher for companies. The U.S. Federal Reserve will face a similar communications challenge; several officials have said that as the economy recovers, the U.S. central bank will eventually have to reassess its stance. Normally, rising prices would lead a central bank to withdraw its stimulus. But in this case, ECB officials and economists say recent higher inflation figures are the result of temporary factors that will fade, leaving inflation below the ECB goal.wftv.com
Europe leaves stimulus running hot ahead of recovery
The European Central Bank is leaving its key pandemic support for the economy running full blast even as the economy shows signs of recovery thanks to lower virus cases and fewer restrictions on activity in the 19 countries that use the euro currency.
Europe leaves stimulus running hot ahead of recovery
The European Central Bank left its key pandemic support for the economy running full blast even as the economy shows signs of recovery thanks to lower virus cases and fewer restrictions on activity in the 19 countries that use the euro currency. ECB President Christine Lagarde was at pains to underline that there was no discussion at Thursday's policy meeting about dialing back support in coming months. Speaking at a news conference after the decision by the bank's 25-member governing council, Lagarde said the central bank expects “a sizeable improvement” over the second quarter of the year.news.yahoo.com
Europe's stimulus likely to keep running as economies reopen
Germany European Central Bank FILE - In this Oct.5,2020 file photo red warning lights shine on the building of the European Central Bank in Frankfurt, Germany. She faces a balancing act: acknowledging improving economic data without triggering a premature market reaction that anticipates the eventual reduction in central bank support for the economy. Any talk of a stimulus taper could mean higher borrowing costs for companies — the last thing the ECB wants right now. The U.S. Federal Reserve will face a similar communications challenge; several officials have said that as the economy recovers, the U.S. central bank will eventually have to reassess its stance. Normally, rising prices would lead a central bank to withdraw its stimulus.wftv.com
Europe's stimulus likely to keep running as economies reopen
The European Central Bank is expected to leave its stimulus efforts running at full steam Thursday — even as the economy shows signs of recovery thanks to the easing of pandemic restrictions. Any talk of a stimulus taper could mean higher borrowing costs for companies — the last thing the ECB wants right now. “Even if economic developments would in our view clearly justify at least having a first tapering discussion, the sheer mention of such a discussion could push up bond yields further and consequently undermine the economic recovery before it has actually started," said Carsten Brzeski, global head of macro at ING bank.news.yahoo.com
World Economic Forum cancels special annual meeting planned for Singapore in August
From left to right, Zhu Min, deputy managing director of the International Monetary Fund (IMF), Haruhiko Kuroda, governor of the Bank of Japan (BOJ), Christine Lagarde, president of the European Central Bank (ECB), Steven Mnuchin, U.S. Treasury secretary, Olaf Scholz, Germany's finance minister, and Kristalina Georgieva, managing director of the International Monetary Fund (IMF), attend a panel session on the closing day of the World Economic Forum (WEF) in Davos, Switzerland, on Friday, Jan. 24, 2020.cnbc.com
New challenge for the Powell Fed: A strengthening economy
The rise in the 10-year yield in recent weeks “caught my attention," Powell acknowledged earlier this month. AdIn anticipation of faster growth and inflation, investors have priced in at least three Fed rate hikes by 2023 — a much earlier lift-off than the Fed itself has forecast. Seeking to reassure investors, Fed officials have said they regard the rise in the 10-year yield as a positive sign, evidence that the financial markets expect the economy to steadily strengthen. As a consequence, Fed officials will likely boost their projections for economic growth for this year and for 2022, lower their estimates for unemployment and raise their expectations for inflation. Fed officials may project economic growth this year of as much as 5%, economists say, up from their December estimate of 4.2%.
ECB plans to ramp up bond buying to tackle surging yields
However, the central bank's bond purchases in the first quarter have been lower than usual and the Frankfurt-based institution said it expected to ramp up its purchases going forward. Bond yields in the euro zone have been rising since February, following their United States counterparts higher after President Joe Biden announced a massive fiscal stimulus plan. Christine Lagarde ECB PresidentHowever, markets were reassured by the ECB's statement Thursday, and bond yields fell in the euro zone. Bond yields move inversely to prices. Christine Lagarde ECB PresidentThe central bank also decided to keep interest rates unchanged.cnbc.com
Lagging US, Europe speeds up help for virus-hit economy
The move is aimed at preventing a premature rise in borrowing costs while businesses are still struggling with coronavirus restrictions like curfews and shutdowns. But it is too early for the eurozone to withstand higher rates, usually associated with recovering growth and inflation. This is undesirable.”AdThe bond purchases have the effect of pushing down bond yields, which are used as benchmarks for borrowing across the region. The rise in longer-term borrowing rates is regarded as a spillover from the U.S., where the economic recovery is expected to be faster. By contrast, the eurozone economy is not expected to recover until mid-2022, held back by a slow vaccine rollout and lower levels of government relief spending compared with the U.S.
Nasdaq closes 2.5% lower as Big Tech gets hit, economic comeback plays lift Dow
Big Tech stocks came under pressure with Apple, Amazon and Microsoft all dropping at least 2%. The Dow Jones Industrial Average reversed a 200-point loss to close 27.37 points higher, or 0.1%, at 31,521.69. These same tech stocks also thrived during the pandemic, so some investors may be taking profits and rotating into names that will do well in a recovery. The 10-year Treasury yield rose again on Monday to around 1.35% after jumping 14 basis points last week to its highest level since February 2020. So far this month, the benchmark rate has moved up 27 basis points.cnbc.com
Watch Goldman CEO David Solomon and ECB's Lagarde debate how to drive a post-Covid recovery
[The stream is slated to start at 11:15 ET. Please refresh the page if you do not see a player above at that time.] The Covid-19 pandemic has sent the global economy into one of its worst recessions ever, and though a rollout of vaccines has brightened the outlook for 2021, it's not yet clear when a full recovery will take place. With that in mind, CNBC's Geoff Cutmore speaks with a panel of top global leaders — European Central Bank President Christine Lagarde, Goldman Sachs CEO David Solomon, German Economic Affairs and Energy Minister Peter Altmaier, French Finance Minister Bruno Le Maire and Volkswagen CEO Herbert Diess — about how to drive a return to pre-pandemic levels of growth. Subscribe to CNBC on YouTube.cnbc.com
Lagarde says pandemic still 'poses serious risks' and the ECB stands ready to act
President of the European Central Bank (ECB) Christine Lagarde. FRANCISCO SECO | AFP | Getty ImagesLONDON — The coronavirus pandemic is still posing "serious risks" to the euro zone economy, European Central Bank President Christine Lagarde said Thursday as lockdowns are tightened across the region. Nonetheless, the pandemic continues to pose serious risks to public health and to the euro area and global economies," she said during a press conference. Stands ready to actAmid the economic uncertainty, the ECB said it's ready to update its policies whenever necessary. Speaking at an event, earlier this month, central bank President Christine Lagarde said: "I think our last projections in December are still very clearly plausible."cnbc.com
European Central Bank stimulus on track as economy struggles
FRANKFURT – With more than a trillion euros in stimulus still in the pipeline to the economy, the European Central Bank left its key bond-purchase program unchanged Thursday as the 19-country eurozone endures a winter economic slowdown due to the pandemic. ECB President Christine Lagarde told a news conference that the economy likely contracted in the last three months of 2020 and the outlook going forward faces risks. The economy is being propped up by massive support from the ECB, national governments, and the EU. The European Union’s executive commission forecasts that the eurozone economy shrank 7.8% last year. Those are zero for short term loans from the ECB to banks, and minus 0.5% on deposits left overnight at the ECB by banks.
ECB expands and extends its bond buying as coronavirus resurgence weighs on the recovery
LONDON — The European Central Bank on Thursday expanded its massive monetary stimulus program by another 500 billion euros ($605 billion), as a second wave of lockdown measures weigh on the euro area's economic recovery. Markets had largely expected the central bank to add to its bond buying, having vowed back in October to "recalibrate its instruments" as a resurgence in coronavirus cases across the continent led to further national shutdowns. The ECB held interest rates on its main refinancing operations, marginal lending facility and deposit facility at 0.00%, 0.25% and -0.50%, respectively. The central bank launched its Pandemic Emergency Purchase Programme (PEPP) earlier this year in a bid to shore up the bloc's economy in the wake of the pandemic. "Unexciting if not almost boring — as in 'the ECB watches the Eurozone economy's back whatever betide' — is exactly how the ECB wants to be seen."cnbc.com
Europe gets new blast of stimulus to counter virus surge
The 25-member governing council decided Thursday to increase its bond purchase stimulus by 500 billion euros, to 1.85 trillion euros ($2.2 trillion). The bond purchases help keep credit affordable and available across the economy for consumers, businesses and governments. That is critically important to help businesses survive until the pandemic eases, and to support governments that are borrowing heavily to pay for aid to businesses and workers. Governments have also marshalled support at the EU level by agreeing to borrow together to create a 750 billion-euro recovery fund. The deposit rate on money banks leave overnight at the ECB is minus 0.5% rate, a penalty that pushes them to lend the money instead.
As infections rise, European Central Bank prepares stimulus
The bank could add a half-trillion euros or more to its existing bond purchases. That means the central bank will vacuum up much of the new debt being issued by hard-pressed governments, lowering the risk of a new eurozone debt crisis. She subsequently pointed to the current, 1.35 trillion ($1.58 trillion) pandemic emergency bond purchase program as a likely place for action. Yet its borrowing costs remain low and markets are calm despite the pandemic, and analysts say ECB support plays a crucial role in that. Without ECB support, a debt crisis could loom.
Top central bankers: Economy needs help despite vaccine news
FRANKFURT – Three of the globe's top central bankers said their economies continue to need help despite progress toward a COVID-19 vaccine, with U.S. Federal Reserve Chair Jerome Powell saying that the U.S. Congress “may need to do more” to cushion the blow from the pandemic. All three central banks have deployed large-scale stimulus such as interest rate cuts and bond purchases that aim to keep borrowing costs affordable for businesses. A multi-trillion-dollar stimulus, enacted in the spring, had helped sustain jobless Americans and ailing businesses but has since expired. “We’re recovering to a different economy,” he said, and there will be a substantial number of workers who will need support as the economy is changed by the pandemic. The Fed is buying $120 billion a month in bonds — $80 billion in Treasurys and $40 billion in mortgage bonds — to try to keep long-term borrowing costs low.
Here are the things that scare Jerome Powell the most about the economy right now
Federal Reserve Chairman Jerome Powell said Thursday he worries about women, children and business owners who face long-term consequences from the coronavirus pandemic. "It's women who are not by choice out of the labor market," Powell continued. Nonfarm payroll growth for October was better than Wall Street expectations and some 12 million workers have returned to their jobs following 22 million layoffs in March and April. Powell cautioned that displaced workers are going to need extended support as the U.S. economy recovers in ways that will be different from its former self. "We're not going back to the same economy," Powell said.cnbc.com
Lagarde: Recovery could be stop-and-go despite vaccine news
FRANKFURT – European Central Bank head Christine Lagarde warned Wednesday that the economy could face a “bumpy,” “stop-start” recovery despite good news about vaccine development. The European Commission has said it plans to secure up to 300 million doses of the experimental vaccine developed by Pfizer and BioNTech. Lagarde said policymakers must ensure that the exceptional downturn remains a one-off blow to the economy and does not turn into a recession that feeds on itself. Analysts have been predicting more stimulus as a renewed increase in virus infections and partial lockdowns weigh on economic growth. Inflation was at minus 0.3% in October and continues to lag the ECB’s goal of below but close to 2%.
Lagarde warns against vaccine optimism and hints at more ECB easing
Christine Lagarde, President of the European Central Bank, speaks to the media following a meeting of the ECB governing board. Thomas LohnesLONDON — European Central Bank President Christine Lagarde cautioned Wednesday against an immediate economic impact from a Covid-19 vaccine, while also giving more details about what the central bank is likely to do next. "While the latest news on a vaccine looks encouraging, we could still face recurring cycles of accelerating viral spread and tightening restrictions until widespread immunity is achieved," Lagarde said at the ECB Forum on Central Banking. "So the recovery may not be linear, but rather unsteady, stop-start and contingent on the pace of vaccine rollout," she said. Pfizer and BioNTech announced Monday that their Covid-19 vaccine was more than 90% effective in preventing the infectious disease, which has boosted optimism that the pandemic could come to an end sooner rather than later.cnbc.com
The Latest: Cases soaring in New Delhi ahead of festival
New Delhi reported 8,593 newly confirmed cases Thursday, up from 7,830 cases a day earlier as people crowd shopping areas ahead of Saturday’s observances of Diwali — an important Hindu festival of lights. The Delhi government projects that new coronavirus cases will be nearly 12,000 daily by the end of November. India’s infections overall continue came in at 47,905 new cases, a rise from 44,281 cases reported Wednesday. The daily death toll represented a more than 55% jump from Minnesota’s previous record of 36 deaths, reported on Friday. State health officials reported 1,039 new coronavirus cases on Wednesday, and a daily positivity rate of more than 18% for the second consecutive day.
EU cuts 2021 economic outlook as virus spreads
BRUSSELS – As COVID-19 cases keep rising, the European Union’s executive commission lowered its forecast for the economic rebound from the coronavirus pandemic next year and said the economy wouldn’t reach pre-virus levels until 2023. The regular autumn forecast foresees growth of only 4.2% in 2021 for the 19 countries that use the euro, instead of the previous estimate of 6.1%. The eurozone and the wider 27-country European Union economy saw a robust rebound in July, August and September, following lockdowns and cautious consumer behavior in the first half of the year that crushed business activity. Third-quarter GDP increased by 12.7% from the previous quarter, the largest increase since statistics started being kept in 1995. The European Central Bank is pumping 1.35 trillion euros ($1.58 trillion) into the economy through regular bond purchases, a step aimed at keeping credit flowing affordably to businesses.
Eurozone growth soars record 12.7% but fears grow for winter
New figures released Friday Oct. 30, 2020, show that the European economy grew by an unexpectedly large 12.7% in the third quarter as companies reopened after severe coronavirus lockdowns. Re-openings there led to strong third-quarter growth of 7.4% that recovered much of the drop from the first part of the year — but didn't dispel fears for the winter months. The European rebound, reflected in figures released Friday by EU statistics agency Eurostat, was the largest increase since statistics started being kept in 1995. It followed an 11.8% contraction in the second quarter in the 19 European Union member countries that use the euro currency. The rebound was led by France, with an enormous 18.2% increase, followed by Spain with 16.7% and Italy with 16.1%.
European Central Bank: Just wait until December
FRANKFURT – The European Central Bank held off from strengthening its current economic stimulus but its President Christine Lagarde said there was “little doubt” that more action would be coming at its December meeting as surging coronavirus infections and new restrictions on activity threaten Europe’s economy. “We have little doubt... that the circumstances will warrant the recalibration and the implementation of this recalibrated package," Lagarde said. Analysts believe that is one reason the bank could take no action Thursday, since there already more stimulus still in the pipeline. Massive ECB stimulus and new spending by governments has helped ward off turmoil on financial markets and cushion the downturn. Airlines, hotels, restaurants and other businesses big and small have suffered a devastating drop in activity.
ECB hints at more stimulus in December as new coronavirus lockdowns are imposed
European Central Bank (ECB) President Christine Lagarde gestures as she addresses a news conference on the outcome of the meeting of the Governing Council, in Frankfurt, Germany, March 12, 2020. The bank decided to keep its rates and wider monetary policy unchanged, but suggested that additional policy action in the euro zone could come as soon as December. The latest statement from the ECB suggests that policymakers will adjust their monetary policy based on those upcoming forecasts. Speaking at a press conference following the announcement, ECB President Lagarde said the euro area economic rebound was "losing momentum more rapidly than expected." We have done it for the first wave; we will do it again for the second wave," Lagarde said.cnbc.com
Europe's central banker: Recovery 'risks losing momentum'
FRANKFURT – The head of the European Central Bank says the economic recovery from the coronavirus pandemic “risks losing momentum” due to a second wave of infections and that more stimulus could be added if necessary. “Since the rebound we saw over the summer, the recovery has been uneven, uncertain and incomplete and now risks losing momentum,” she said, adding that “the options in our toolbox have not been exhausted. It's rate for short-term lending to banks is zero; for deposits left overnight from banks, the rate is negative 0.5 percent. The negative rate means banks pay a penalty for leaving money at the central bank instead of lending it to business. The ECB's steps are credited with helping keep the coronavirus outbreak from turning into a crisis for financial markets.
‘No doubt’ that crucial U.S. fiscal stimulus is coming, IMF managing director says
LONDON — Kristalina Georgieva, the managing director of the International Monetary Fund, told CNBC Thursday that she has "no doubt" the U.S. will implement a new economic stimulus package that will help reduce the current uncertainties for the global economy. The IMF boss said that the impact of a U.S. stimulus package would be much-needed positive whenever it's introduced, adding that if it were implemented earlier it would "provide a boost to certainty and certainty is something we do need in this crisis." Georgieva said the U.S. Federal Reserve's monetary policy, along with the government's fiscal policy, were the "two levers" managing the U.S. economy and that it was "best if they are used together in combination." In March, the Fed lowered interest rates to near-zero and launched a quantitative easing program of $700 billion to support the U.S. economy. However, a second fiscal package looks unlikely before the Nov. 3 election.cnbc.com
ECB chief says arsenal of economic stimulus on standby amid upsurge of coronavirus cases in Europe
LONDON — European Central Bank President Christine Lagarde on Thursday said her organization would be prepared to impose further emergency measures to tackle the economic fallout from the coronavirus crisis, with the region confronting a rapid upsurge of Covid-19 infections. "The many weapons that we have available, ranging from interest rates to forward guidance and asset purchase programs, we stand ready. We have done a lot, and if more is needed because the situation deteriorates, then we will do what is necessary." Europe has recorded more than 7.4 million cases of the coronavirus, according to the World Health Organization, with 251,478 related deaths, and hospitalizations rising at an alarming rate. WHO's regional director for Europe, Dr. Hans Kluge said on Thursday that the "exponential" increases in daily cases and matching percentage increases in daily deaths across the region raised "great concern."cnbc.com
Europe's central bank moves toward introducing digital euro
The central bank issued a comprehensive report outlining the reasons why it might need to take the step. It said no decision has been made, and that any digital euro would complement cash, not replace it. We should be prepared to issue a digital euro, should the need arise.”A digital euro would be different from current cashless payment systems run by the private sector because it would be official central bank money - trustable, risk-free and likely less expensive to use. A central bank digital currency could also be used offline, for instance, to transfer small amounts between individuals using digital wallets on their smartphones and a Bluetooth connection. China’s central bank is already testing an official digital currency, while the central bank of Sweden says it has initiated a pilot project.
Inflation slump could presage more eurozone stimulus
Excluding volatile food and fuel prices, inflation fell to 0.2% in September from 0.4% in August. The so-called core inflation figure is often considered the better measure of price movements in the economy as a whole. While low inflation can benefit consumers up to a point, ongoing weak prices can be a sign of slack in the economy. Low inflation can also make it harder for indebted countries in the eurozone to improve their competitiveness compared with the other members of the currency bloc. ECB head Christine Lagarde gave little indication that more stimulus was coming at the bank's Sept. 10 meeting.
Christine Lagarde hints at a major tweak for the ECB's inflation target
The European Central Bank could be about to tweak its main policy objective as it combats the economic fallout from the coronavirus crisis. As a result, a recent strategy review in Frankfurt could lead to a new target. "In the current environment of lower inflation, the concerns we face are different (than in 2003) and this needs to be reflected in our inflation aim," ECB President Christine Lagarde said at a press conference on Wednesday. "If credible, such a strategy can strengthen the capacity of monetary policy to stabilize the economy when faced with the lower bound," Lagarde said. The ECB's strategy review is studying how to adapt its policy to the current economic reality.cnbc.com
Central bank head: Europe's recovery uncertain, incomplete
FRANKFURT – The head of the European Central Bank says that the economy is rebounding but that the recovery remains uncertain, incomplete and dependent on containing the virus outbreak. But she added that “the strength of the recovery remains very uncertain, as well as uneven and incomplete.”“It continues to be highly dependent on the future evolution of the pandemic and the success of containment policies,” she said. The ECB is pumping 1.35 trillion euros ($1.6 trillion) in newly printed money into the economy through ongoing bond purchases through the end of next year. That is a large-scaled monetary stimulus aimed at preventing the pandemic from causing turmoil in financial markets, and at keeping borrowing costs low for companies to help support growth. The European Central Bank is the chief monetary authority for the 19 countries that use the euro, analogous to the Federal Reserve in the U.S. or the Bank of England in Britain.
European Central Bank keeps stimulus policies on hold
FRANKFURT The European Central Bank left its key stimulus settings unchanged with almost a trillion euros (dollars) in stimulus still in the pipeline to bolster the eurozones rebound from the severe coronavirus shutdowns. The pause may only be a prelude to even more stimulus later this year as the ECB and global counterparts such as the US Federal Reserve make clear their determination to do maintain their massive support to limit the damage from the virus outbreak. The banks governing council made the decision at a meeting Thursday. Markets were waiting to hear ECB head Christine Lagardes outlook on possible threats to the economic rebound from a stronger euro, which can hurt exporters, and from weak inflation, which indicates weak demand. Many analyst think that the ECB will add to its pandemic emergency bond purchase stimulus at its December meeting, when it will have new inflation and growth forecasts.
Falling prices flash warning light for Europe's economy
A 0.2% annual drop in prices in August in the 19 countries that use the euro underlined that demand from unsettled consumers across the economy remains weak despite the reopening of many businesses. The economy plunged by a dizzying 11.8% in the second quarter from the first quarter. That means it doesnt represent outright deflation, a dreaded downward price spiral that can become a long-term trap for an economy. He expects a partial rebound in prices in the near term followed by a period of subdued inflation rather than a sustained fall in prices. He predicted the bank would raise the amount of pandemic stimulus purchases this year.
European Central Bank keeps monetary stimulus on track
FRANKFURT The European Central Bank has left its monetary stimulus programs unchanged ahead of a key meeting of EU leaders on a recovery plan meant to help the economy bounce back from the coronavirus shutdowns. The ECB held off providing new measures Thursday after unleashing in recent weeks massive doses of monetary stimulus that have helped keep borrowing costs for companies and consumers at roughly pre-pandemic levels. There is also interest in whether the ECB could increase the 1.35 trillion euros figure for the pandemic emergency purchases if needed. Average borrowing costs for big eurozone governments rose during March but have since returned to pre-pandemic levels. The ECB left its other stimulus settings unchanged on Thursday.
European Central Bank nearly doubles pandemic support scheme
FRANKFURT The European Central Bank has boosted its pandemic emergency support program by 600 billion euros to 1.35 trillion euros ($1.5 trillion) in an effort to keep affordable credit flowing to the economy during the steep downturn caused by the virus outbreak. Under the pandemic support program, the ECB buys corporate and government bonds and other financial assets from banks, paying with newly created money. That helps lower longer-term interest rates, keeping the pandemic from drying up needed funding for borrowers. Italy's lockdown will cost it lost tax revenues and additional spending to support the economy. The bank has also set up long-term offers of credit to banks at even lower rates if they show they are lending to companies.
With Italy at risk, Europe Central Bank could boost stimulus
Under the program, the central bank buys government and corporate bonds with newly printed money, a step that helps keep a lid on borrowing costs for businesses and governments. Holger Schmieding, chief economist at Berenberg bank, estimates there is a 60% chance that the central bank will decide to boost its pandemic stimulus program at Thursday's meeting. If it doesn't, he says the central bank could so in July. The ECB could also lengthen the pandemic stimulus program's duration; right now it is slated to run through the end of the year. Lagarde has said the ECB is accountable to the EU parliament and the European Court of Justice, which had approved the purchases.
ECB set for policy decision as coronavirus sends the euro zone economy into a tailspin
The European Central Bank's (ECB) Governing Council will convene in a virtual meeting Thursday to discuss whether the measures taken, for now, are enough to weather what could be the worst economic crisis since World War II. The odds are high that ECB President Christine Lagarde will stress the central bank's ability to do more if needed in order to avoid fragmentation in the euro area and a tightening of financial conditions. First, to ensure accommodative financial conditions and preventing tensions in the financial system," said Dirk Schumacher, an ECB watcher with Natixis, in a research note. To manage the second objective, the ECB is trying to rein in spread expansions between the core and so-called peripheral countries such as Italy, Spain, Portugal and Greece. A spread refers to the difference in the yields between countries, which can highlight how fearful investors have become on owning European debt.cnbc.com
Europe could opt for 'helicopter money' as the coronavirus destroys economic growth, experts predict
European Central Bank (ECB) President Christine Lagarde addresses a news conference on the outcome of the meeting of the Governing Council in Frankfurt, Germany, January 23, 2020. We might have to try helicopter money." Dario Perkins, managing director at global macro research firm TS Lombard, also said that helicopter money could be an option. The ECB has so far avoided looking at helicopter money as a real possibility. The overarching question though is how to potentially provide helicopter money.cnbc.com
ECB surprises markets by not cutting rates, but announces stimulus to fight coronavirus impact
The European Central Bank decided Thursday not to cut interest rates, despite market expectations for a reduction amid the ongoing coronavirus outbreak. However, the central bank did announce measures to support bank lending and expanded its asset purchase program by 120 billion euros ($135.28 billion). Market participants were expecting a rate cut of 10 basis points as a way to stimulate the euro economy amid fears that a recession is about to hit the region. Both the Federal Reserve and the Bank of England cut rates over the last week as ways to support their respective economies. The negative rate is meant to spur banks to loan money rather than park it at the central bank.cnbc.com
Watch ECB President Christine Lagarde's news conference live
[The stream is slated to start at 9:30 am ET. Please refresh the page if you do not see a player above at that time.] European Central Bank President Christine Lagarde speaks to the media Thursday morning ET following the bank's decision to hold interest rates steady but institute several stimulus measures. In a closely watched decision amid the global coronavirus scare, the ECB announced a stimulus package that included another 120 billion euros in asset purchases, equal to $135.3 billion. Read more:Euro whipsaws as ECB surprises by holding ratesCoronavirus live updates: Princess suspends cruises, Spain's top soccer league suspendedFed boosts money it's providing to banks in overnight repo lending to $175 billionSubscribe to CNBC on YouTube.cnbc.com
Lagarde warns of a 2008-like crisis unless EU takes action on coronavirus, reports say
European Central Bank (ECB) President Christine Lagarde addresses a news conference on the outcome of the meeting of the Governing Council in Frankfurt, Germany, January 23, 2020. The European Union could face a financial crisis similar to the global crash of 2008 if governments don't coordinate to tackle the spread of the coronavirus, the European Central Bank President Christine Lagarde has reportedly said. The 27 European heads of state held a conference call Tuesday evening to harmonize their actions against the virus. The Financial Times also reported that Lagarde called on EU leaders to take urgent action or risk another crisis, citing a source. A spokesperson for the European Central Bank declined to comment.cnbc.com
More than 10 years after the crisis, central banks are hoping the public will give them a new direction
European Central Bank President Christine Lagarde. The European Central Bank (ECB) is hosting its first "listening event" in Brussels next month. Central banks have changedThe two major central banks have undergone a massive change in the aftermath of the global financial crisis. But the global financial community is now questioning whether both central banks have reached a limit. The International Monetary Fund said in November that "concerns about the expanded activities of central banks led to skepticism about the necessity or the appropriate degree of central bank independence."cnbc.com
Hopes for fiscal stimulus are driving 'optimism' in Davos, says Barclays CEO
The potential for governments to deploy fiscal stimulus policies in 2020 is creating greater optimism at this year's World Economic Forum in Davos than a year ago, according to Barclays CEO Jes Staley. With the European Central Bank (ECB) cutting interest rates to a record low -0.5% last year, new ECB President Christine Lagarde has joined her predecessor Mario Draghi's calls for governments with fiscal headroom, such as Germany and the Netherlands, to start fiscal spending programs in order to boost the ailing euro zone economy. The U.S. Federal Reserve cut rates three times in 2019 as central banks around the world shifted toward more accommodative monetary policies. "The U.S. is taking that and driving a fiscal stimulus policy, and I think you will start to see other countries like the U.K. begin to do that, and that's providing a certain floor to the economy which is lending itself to more optimism in Davos this year than last year," Staley told CNBC on Wednesday. With markets now beginning to price in a cut by the Bank of England this year, Staley predicted that the British government will look to embark on a broad fiscal spending program to invest in regional infrastructure, since the impact of looser monetary policy on the global economy is diminishing as rates worldwide move closer to negative.cnbc.com
Here's who's going to Davos this year
Workers listen during a briefing inside the Congress Center, the venue for the World Economic Forum (WEF), in Davos, Switzerland, on Sunday, Jan. 20, 2019. Daniel Roland | AFP | Getty ImagesThe newly-appointed head of the European Central Bank is a well-known figure at WEF. Chris J Ratcliffe | Getty Images News | Getty ImagesThe 17-year old Swedish climate activist is due to return to Davos this year. NICHOLAS KAMM | AFP | Getty ImagesThe Bulgarian national was appointed head of the International Monetary Fund in the fall of 2019. Steven Mnuchin, US Treasury SecretarySteven Mnuchin, U.S. Secretary of the Treasury, gestures as he attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 25, 2018.cnbc.com
5 things to know before the stock market opens Thursday
Andrew Harrer | Bloomberg | Getty ImagesU.S. stock futures were lower Thursday morning after weekly jobless claims jumped to their highest level since 2017. On the monetary policy front, the European Central Bank left interest rates unchanged Thursday. Nicholas Kamm | AFP | Getty ImagesUncertainty about whether the U.S. and China can reach a "phase one" trade deal, or at least agree to a detente, before Sunday's deadline for new American tariffs against Chinese products has been hanging over the stock market. The prime minister has repeatedly said a vote for his party means the ability to "get Brexit done." Riyadh on Wednesday made history by listing 1.5% of its state-run oil giant on its local stock exchange, the Saudi Tadawul.cnbc.com
ECB holds rates steady at Lagarde's debut policy meeting
The European Central Bank (ECB) kept its rates unchanged on Thursday following new President Christine Lagarde's first monetary policy meeting in Frankfurt. The euro traded roughly flat against the dollar at $1.1132 following the announcement awhile equity markets turned slightly negative after marginal early gains. Lagarde suggested that the growth slowdown was stabilizing but that incoming data since October's policy meeting "pointed to continued muted inflation pressures and weak euro area growth dynamics." Inflation was revised up by 0.1% for 2020 but down by 0.1% to 1.4% for 2021, with 2022 forecast at 1.6%. The former head of the International Monetary Fund (IMF) and former French finance minister inherited an inflation rate of 1.0% against the ECB target of "below but close to 2%" upon taking the reins in November.cnbc.com