ecb to hold fire on rates but could move in june
Last Updated : GMT 01:03:47
Arab Today, arab today
Arab Today, arab today

ECB to hold fire on rates but could move in June

Arab Today, arab today

Arab Today, arab today ECB to hold fire on rates but could move in June

Frankfurt - AFP

The European Central Bank is not expected to cut interest rates this week, but could start paving the way for a possible move in June if deflationary dangers persist, analysts said. The ECB has held eurozone borrowing costs at their current all-time low of 0.25 percent since November. Last month, the bank's president Mario Draghi insisted that "we do not exclude further monetary policy easing and we firmly reiterate that we continue to expect the key ECB interest rates to remain at present or lower levels for an extended period of time". Nevertheless, no monetary easing appears to be on the cards at the bank's next meeting on Thursday -- this time being held in Brussels -- central bank watchers said. At the moment, deflation is perceived to be the biggest threat to the eurozone's economic recovery. Deflation is a general decline in prices and can be highly damaging if consumers, expecting prices to fall further, hold off purchases. Last month, area-wide inflation picked up slightly, but still fell short of forecasts and was way below the ECB's target of just below 2.0 percent. Consumer price inflation rose to a 0.7 percent rate in April, up from the 0.5 percent in March, which was the lowest since October 2009. UniCredit analyst Marco Valli said that inflation had come in below ECB expectations for the past two months. "But the extent of this weakness and its composition -– mostly skewed towards non-core components -– is unlikely to trigger central bank action in May," Valli said. Still, action "appears more likely than not" in June, the expert continued. The ECB is scheduled to publish its latest economic forecasts on Thursday and it may be compelled to downgrade its inflation forecasts. "Remaining completely inactive in this context may damage its credibility," Valli believed. Jennifer McKeown at Capital Economics agreed - Dovish tone expected - "We doubt that recent events and data releases have been significant enough to ensure more policy action from the ECB at its May meeting. But developments in the inflation outlook and in money markets suggest that the bank's two 'contingencies' for further action might soon be met," McKeown said. "We expect a very dovish tone from Draghi to hint that such action might be taken at the June meeting. This could involve an interest rate cut together with more long-term loans to banks or even a programme of asset purchases," the analyst added. In addition to cutting its interest rates, the ECB could ease monetary conditions by pumping money into the system or buy up government bonds to bring down borrowing costs. ECB officials have repeatedly said they see no threat of deflation, but at the last few meetings president Draghi has always insisted that the central bank stood ready to act if necessary. Nevertheless, analysts believe the ECB's hand will not be forced just yet. "Our analysis of the various options suggests that the ECB is likely to keep its powder dry on Thursday," said Commerzbank economist Michael Schubert. Deutsche Bank economist Gilles Moec agreed. "I'm not expecting any new measures in May. There has been no event or sudden change in the data flow which would compel the ECB to act," he said. "June would be more much more propitious because the ECB is publishing its updated inflation and growth forecasts," Moec said. Newedge Strategy analyst Annalisa Piazza said that among the so-called unconventional measures at the ECB's disposal -- meaning those not related to interest rates -- the central bank would "likely remain mainly focused on funding conditions for banks". "Should the latter deteriorate in the future, the ECB might decide to embark on a new liquidity injection to banks and/or plan a targeted purchase programme," Piazza said. As for conventional measures, "risks of a rate cut in June remain elevated as inflation might surprise to the downside in May and the ECB will be forced to revise its near-term picture for inflation with the June updated projections," the expert said.

arabstoday
arabstoday

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 to hold fire on rates but could move in june ecb to hold fire on rates but could move in june

 



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 to hold fire on rates but could move in june ecb to hold fire on rates but could move in june

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today Banyan Tree Phuket Takes Festive Season

GMT 01:34 2017 Friday ,17 November

Banyan Tree Phuket Takes Festive Season
Arab Today, arab today Keep kids busy at Thanksgiving gatherings

GMT 11:14 2017 Friday ,10 November

Keep kids busy at Thanksgiving gatherings
Arab Today, arab today Israel ready to cooperate with Saudi

GMT 06:31 2017 Friday ,17 November

Israel ready to cooperate with Saudi
Arab Today, arab today Top Democrat faces investigation

GMT 09:50 2017 Friday ,17 November

Top Democrat faces investigation
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today Angola oil boss sacked by father's protege

GMT 11:15 2017 Thursday ,16 November

Angola oil boss sacked by father's protege
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Baidu speeds up AI progress

GMT 11:46 2017 Friday ,17 November

Baidu speeds up AI progress
Arab Today, arab today Urban, young and active?

GMT 11:01 2017 Thursday ,16 November

Urban, young and active?
Arab Today, arab today Ayten Amer happy for “The Flood” success

GMT 08:06 2017 Wednesday ,15 November

Ayten Amer happy for “The Flood” success
Arab Today, arab today Unloved vultures fight for their survival

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 08:21 2017 Tuesday ,14 November

Nelly Karim focuses on humanitarian roles

GMT 09:23 2017 Wednesday ,15 November

Years melt away as Bening & Bell play unlikely lovers

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 13:40 2017 Monday ,13 November

Pollution spikes in Delhi amid warnings

GMT 11:49 2017 Thursday ,17 August

Egyptian artist presents new collection of designs

GMT 10:55 2017 Thursday ,16 November

UN warns fuel running out

GMT 01:04 2017 Wednesday ,15 November

In Morocco, a blue tourist town

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday