The European Central Bank "waits and sees"

The European Central Bank "waits and sees"

There is no sight of another European stimulus.

As the world faces the new wave of infections, and some states are imposing the lockdown measures once again, further measures must be taken.

Yesterday, all eyes were on the European Central Bank. The outcome of the meeting wasn’t what investors expected. The bank decided to leave the interest rates at the current levels, and the stimulus program made to keep the economy in-check the same. The Pandemic Emergency Purchase Program (PEPP) worth $1.54 trillion will be deployed until next year’s June. However, the bank revised it and decided to use it until the crisis is over.

As said before, the interest rates will be the same or even lower, depending on how the situation unfolds. The rates will be so until the inflation outlook “robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.”

The Eurozone GDP contraction is seen at 8.7% for 2020, lower than what the IMF predicted – 10.2%.

Still, Christine Lagarde, the ECB president, characterized the necessity of European leaders’ agreement upon a fiscal package as “critical.”

Now, Europe is looking forward to the European Council Summit taking place on Friday and Saturday. EU leaders will meet to discuss the 750 billion EUR Recovery Fund.

EUR/USD traded at around $1.14. The European benchmark index, Europe50, lost 0.9%.

Sources: cnbc.com, foxbusiness.com

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