European Stimulus Needed But ECB Likely to Wait

After revealing a host of stimulus measures at its last meeting, the European Central Bank (ECB) is unlikely to act on Thursday—but that hasn’t stopped a number of analysts saying that more stimulus is needed.

In an unprecedented move last month, the ECB imposed a negative interest rate on banks for their deposits—in effect charging lenders to park money with it. It was one of a host of measures designed to boost lending, spur the euro zone’s recovery and combat growth-sapping disinflation.

As such, few expect more from ECB President Mario Draghi on Thursday.

“The ECB has announced a very comprehensive package and therefore I think it’s important to wait for the effect of these measures,” Gertrude Tumpel-Gugerell, former ECB executive board member, told CNBC.

While Carsten Brzeski, senior economist at ING, added: “Following the June fireworks, we expect the ECB to take it easy.”

But worryingly low inflation—which has dogged the region’s stuttering recovery—persisted last month, amid concerns the region could be heading towards a period of deflation.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza