Just like Mark Carney, Mario Draghi can afford to wait a bit before adding more monetary stimulus.
Economists in a Bloomberg survey predict the European Central Bank president will keep policy unchanged on Thursday but announce fresh measures before the end of the year. The meeting comes a week after the Bank of England, headed by Carney, opted not to cut rates in the immediate wake of the U.K.’s vote to quit the European Union, instead signaling that it will probably ease in August.
In the three weeks since the British referendum, Europe’s central banks have calmed volatile markets with liquidity pledges that have bought them time to gauge the threat to companies and households. Draghi has predicted that growth in the euro area will slow, fueling speculation about how much further he can go with a stimulus package that already includes negative interest rates and a 1.7 trillion-euro ($1.9 trillion) asset-buying program.
“The ECB is still very much in easing bias and has admitted that the Brexit shock could knock a cumulative half percentage point off euro-zone growth over the next three years,” said Alan McQuaid, chief economist at Merrion Capital in Dublin. “It will do whatever it takes to boost growth and push inflation up but, as with most countries, the onus is ultimately on fiscal policy to deliver the required sustained-recovery pill.”
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.