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The European Central Bank "waits and sees"

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
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

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.