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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