The European Central Bank maintained its loose monetary policy unchanged, but admitted that the outlook for the European economy has deteriorated and hinted that it will expand stimulus measures in December.
With the counterattack of the second wave of the epidemic, the Eurozone lockdown measures have been upgraded.
The recovery of the already fragile European economy is hindered, and recession expectations have increased,The European Central Bank hinted More monetary stimulus will be released.
On the 29th, the European Central Bank announced a monetary policy decision: the main refinancing business interest rate, marginal lending interest rate, and deposit interest rate will remain unchanged at 0.00%, 0.25% and -0.50%. In response to the new crown epidemic, the emergency debt purchase plan (PEPP) is still 1.35 trillion euros.
At a subsequent press conference, European Central Bank President Lagarde admitted that due to the recent outbreak of the new crown epidemic in Europe, the euro zone economy “weakened faster than we expected.”
The European Central Bank’s statement on the same day mentioned that the Management Committee will reassess the European economic recovery in December and make an “appropriate response” to ensure that “financing conditions can offset the impact of the epidemic on inflation. Negative impact of “.
This signal of strengthening monetary stimulus caused the exchange rate of the euro against the dollar to fall by over 0.8%.
The market generally believes that, from this statement, the European Central Bank is likely to expand the scale of the Emergency Bond Purchase Program (PEPP) in December.
After national blockades have had an effect on the containment of the new crown epidemic, and at the same time the uncertainty of Brexit and the US election has ended, the European Central Bank can conduct more targeted monetary policy calibration to effectively alleviate the market’s pessimistic European economic outlook Pessimism.
However, analysts at Rabobank warned that the success of the ECB’s stimulus actions to boost the European economy will also depend on the fiscal policy coordination of governments. Therefore, the risk of a “W-shaped recession” in the euro zone in the next two quarters remains.
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