The staff projections show GDP growth rates of -7.3%, 3.9%, 4.2% and 2.1% for the years 2020 to 2023. ‘Whatever it takes’ has just been extended by ‘as long as it takes,’ said Carsten Brzeski, chief economist at ING Germany, referring to Draghi’s famous 2012 pronouncement at the height of the eurozone debt crisis that the ECB would do “whatever it takes” to preserve the euro. U.S. stocks pushed higher, with the S&P 500 “This is the brave new world of reversal-rate economics,” said Richard Barwell, an economist at BNP Paribas Asset Management. DJIA, SXXP, Microsoft may earn an Affiliate Commission if you purchase something through recommended links in this article.  up 0.5%, while the Dow Jones Industrial Average The pan-European Stoxx 600 index Copyright © 2020 MarketWatch, Inc. All rights reserved. (Bloomberg) -- The European Central Bank’s surprise tweaks to monetary policy amount to an effective interest-rate cut that puts banks on the frontline of the euro area economic recovery. The ECB is hinting it may not cut rates and conceded that negative rates could be damaging to the economy (paywall), though they maintain their negative rate … He also writes about global macro issues and trading strategies. 10 bp rate cut, QE of 30 billion euros per month, extension of forward guidance This month, U.S. DJIA, -0.55% and European stocks SXXP, +0.17% have both added about 2%. Back in September, the ECB had still been optimistic on the fourth quarter but the recent lockdowns mean it now expects a contraction. ECB’s Lagarde says decision not to cut rates was ‘unanimous’ The European Central Bank decided Thursday not to cut interest rates, despite market expectations for … The bond-buying decision sent European bond yields sinking, dragging on U.S. Treasury yields. ECB Tested by Market Calls for Rate Cut That Will Erode Arsenal Paul Gordon 3/2/2020. +0.03% Previously, President Trump previously lashed out at the ECB for its dovishness. Before moving to New York, he reported for MarketWatch from Frankfurt, London and Washington, D.C. is widely expected to cut the rate it charges banks to park money in its virtual vaults. On 8 October 2008 the ECB announced that, starting from the operation to be … A full ECB rate cut is now priced in by futures markets for 2019 after Draghi showed his concerns about the persistently low inflation in the eurozone and the lingering risks to growth. Nevada adds protections for hospitality workers — while shielding businesses from liability. The European Central Bank (ECB) is the central bank of the 19 European Union countries which have adopted the euro. The ECB also made adjustments to its targeted long-term refinancing operations to further encourage lending and, in a bid to ease pressure on bank profitability from a lower deposit rate, announced it would introduce a tiered system that would exempt a chunk of excess reserves parked by banks with the ECB from the negative rate. Updated 12:36 PM ET, Wed September 4, 2019 . In outgoing ECB President Mario Draghi’s next-to-last meeting, the central bank, as expected, delivered a 10 basis point cut to the deposit rate … The grim outlook facing the euro area was starkly laid out Friday by the ECB, which forecast in a pre-release of its May Economic Bulletin that the region’s economy could contract by as much as 12% this year due to the lockdown measures implemented to contain the coronavirus pandemic. The European Central Bank has hinted it could cut interest rates to tackle a slowdown in the eurozone economy. 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Deutsche Bank CEO: Another ECB rate cut will have damaging side effects. See: The ECB’s challenge: Pushing rates further into negative territory without wrecking eurozone banks. “You can still cut the rates you charge on loans to banks even if you can’t cut the rate you pay on deposits.”, When asked in March why the ECB didn’t cut the deposit rate, President Christine Lagarde said other tools were a more “efficient response.”. The decision marks another push by policy makers to help the economy through the worst shock in decades by stabilizing bond markets and making sure enough cash is finding its way to companies struggling to stay afloat. +0.16% Interest rates were cut … FRANKFURT (Reuters) - ECB policymakers are leaning toward a stimulus package that includes a rate cut, a beefed-up pledge to keep rates low for longer and compensation for banks … The European Central Bank is turning on the stimulus taps again, pushing interest rates further into negative territory in order to support the region's flagging economy. In line with that guidance, the bank kept interest rates unchanged at record lows, although it maintained a long-standing pledge to cut them further if necessary. On inflation they cut their projections for this year and 2022. The E.C.B. Risks of a eurozone recession remained “small,” he said, but had increased since the ECB’s last meeting. That in conjunction with a 10 or 20 bps rate cut may be the right way for Europe if the coronavirus really does dampen economic activity so much as to lead to a risk of recession and deflation. Lee Sue Ann, Economist at UOB Group, reviewed the latest ECB …  rose around 110 points, or 0.4%. The euro After cutting conventional interest rates for most of the past decade, the ECB’s decision is another sign officials see little room to lower these any further. The ECB already has a 750 billion-euro ($823 billion) emergency asset purchase program, which Lagarde said she’s willing to raise if need be. ECB’s Stealth Rate Cut Lures Banks to Fund Virus-Hit Economy. Read More: Euro Area’s Record Slump Adds Urgency to Fiscal Aid Calls, “It’s a very important decision,” Peter Praet, the ECB’s former chief economist, said in an interview with told Bloomberg TV’s Francine Lacqua on Friday. Investors are currently pricing a 10 basis-point cut in December next year. Still, there was a broad consensus in favor of the entire package. The European Central Bank’s surprise tweaks to monetary policy amount to an effective interest-rate cut that puts banks on the frontline of the euro area economic recovery. Based in New York, Watts writes about stocks, bonds, currencies and commodities, including oil. That said, the tweak to TLTRO loans -- described by Robeco strategist Martin van Vliet as a “stealth rate cut” -- and the introduction of the pandemic emergency longer-term refinancing operations, are among the least controversial moves the ECB could make, according to Banque Pictet & Cie’s Frederik Ducrozet.