Daily Sabah logo

Politics
Diplomacy Legislation War On Terror EU Affairs Elections News Analysis
TÜRKİYE
Istanbul Education Investigations Minorities Expat Corner Diaspora
World
Mid-East Europe Americas Asia Pacific Africa Syrian Crisis Islamophobia
Business
Automotive Economy Energy Finance Tourism Tech Defense Transportation News Analysis
Lifestyle
Health Environment Travel Food Fashion Science Religion History Feature Expat Corner
Arts
Cinema Music Events Portrait Reviews Performing Arts
Sports
Football Basketball Motorsports Tennis
Opinion
Columns Op-Ed Reader's Corner Editorial
PHOTO GALLERY
JOBS ABOUT US RSS PRIVACY CONTACT US
© Turkuvaz Haberleşme ve Yayıncılık 2023

Daily Sabah logo

عربي
  • Politics
    • Diplomacy
    • Legislation
    • War On Terror
    • EU Affairs
    • Elections
    • News Analysis
  • TÜRKİYE
    • Istanbul
    • Education
    • Investigations
    • Minorities
    • Expat Corner
    • Diaspora
  • World
    • Mid-East
    • Europe
    • Americas
    • Asia Pacific
    • Africa
    • Syrian Crisis
    • Islamophobia
  • Business
    • Automotive
    • Economy
    • Energy
    • Finance
    • Tourism
    • Tech
    • Defense
    • Transportation
    • News Analysis
  • Lifestyle
    • Health
    • Environment
    • Travel
    • Food
    • Fashion
    • Science
    • Religion
    • History
    • Feature
    • Expat Corner
  • Arts
    • Cinema
    • Music
    • Events
    • Portrait
    • Reviews
    • Performing Arts
  • Sports
    • Football
    • Basketball
    • Motorsports
    • Tennis
  • Gallery
  • Opinion
    • Columns
    • Op-Ed
    • Reader's Corner
    • Editorial
  • TV
  • Business
  • Automotive
  • Economy
  • Energy
  • Finance
  • Tourism
  • Tech
  • Defense
  • Transportation
  • News Analysis

European Central Bank keeps rates, stimulus unchanged, hints at December action

by Agencies

FRANKFURT Oct 29, 2020 - 4:04 pm GMT+3
People wearing face masks walk in front of a big euro sign as the European Central Bank (ECB) headquarter can be seen in the background, in Frankfurt am Main, western Germany, April 24, 2020. (AFP Photo)
People wearing face masks walk in front of a big euro sign as the European Central Bank (ECB) headquarter can be seen in the background, in Frankfurt am Main, western Germany, April 24, 2020. (AFP Photo)
by Agencies Oct 29, 2020 4:04 pm
RECOMMENDED
An official walks past Turkish and Emirati flags at Qasr Al-Watan in Abu Dhabi, United Arab Emirates, Monday, Feb. 14, 2022. (AP File Photo)

'UAE, Türkiye to maintain cooperation on economic development'

türkiye-uae-relations

The European Central Bank (ECB) held off from strengthening its stimulus programs despite growing concern that a renewed surge in COVID-19 cases could stall the economy’s recovery from the deep downturn in the first part of the year, even as analysts forecast that the bank will eventually take further action.

But the ECB signaled that more stimulus could be coming at its December meeting, given that risks are “clearly tilted to the downside,” and new staff projections would make “a thorough reassessment” possible.

The bank made no change to its 1.35 trillion euros ($1.58 trillion) pandemic emergency bond purchase program, which pumps newly created money into the economy to keep credit flowing to businesses and promote economic activity. Those regular purchases are set to run through the middle of next year. Analysts say that is one reason the bank is holding off on increasing the amount since there is plenty of stimulus still in the pipeline.

“The Governing Council will recalibrate its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favorable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path,” the ECB said in a statement.

Having already extended its copious stimulus until next June, the ECB is buying record amounts of debt, leaving policymakers time to devise their next move and keep the pressure on governments to use their budget levers to help the economy.

But new restrictions aimed at curbing the spread of COVID-19 are weighing on the 19-country eurozone’s economy, raising fears that it could slip back into recession as large parts of the services sector are shut down again.

“In the current environment of risks clearly tilted to the downside, the Governing Council will carefully assess the incoming information, including the dynamics of the pandemic, prospects for a rollout of vaccines and developments in the exchange rate,” the ECB said.

With Thursday’s decision, the ECB also remains on track to buy another several hundred billion euros worth of bonds through other asset purchase schemes. It kept its deposit rate unchanged at a record low of minus 0.5% while the main refinancing rate remains at zero.

The ECB’s key goal is to raise inflation toward its target of below but close to 2%, the level considered best for the economy. Inflation was minus 0.3% in September, partly a result of temporary measures such as a value-added tax cut in Germany but also a sign of weaker than optimal demand.

Economy output plunged 11.8% in the 19 countries that use the euro in the second quarter but is estimated to have rebounded in the July-September months by as much as 10% as businesses reopened. Figures for the quarter are to be released Friday.

Europe has been in part sustained by business ties between Germany, its largest economy, and China, where the pandemic hit earlier but has been largely contained, allowing activity to rebound to near-normal levels. German automaker Volkswagen said Thursday it had increased sales in China by 3% in the third quarter over the same quarter in 2019, before COVID-19.

Massive ECB stimulus and new spending by governments has helped ward off turmoil on financial markets and cushion the downturn. Governments have deployed furlough support programs to pay worker salaries if they are put on short hours or no hours but not laid off. That has held down the rise in unemployment, which was 8.1% in August.

Yet the prospects for the last three months of the year have worsened as infection numbers have risen, raising the possibility of more anti-COVID-19 restrictions. Germany has ordered restaurants, bars and theaters to close from Monday through Nov. 30 in what is being called “lockdown light.” Chancellor Angela Merkel warned of a “difficult winter” in a speech in parliament Thursday. While industrial firms are doing better, services companies that depend on personal contact have been hard hit. Airlines, hotels, trade shows and restaurants have seen devastating drops in revenue.

Analysts say the ECB may use the December meeting to add more stimulus based on new staff projections for growth and inflation. Another reason to wait may be that not all of the 25 members of the governing council agree on the need for more stimulus.

RECOMMENDED
An official walks past Turkish and Emirati flags at Qasr Al-Watan in Abu Dhabi, United Arab Emirates, Monday, Feb. 14, 2022. (AP File Photo)

'UAE, Türkiye to maintain cooperation on economic development'

türkiye-uae-relations
  • shortlink copied
  • RELATED TOPICS
    fight-against-terrorism DEUTSCHE-BANK US-LIBYA-RELATIONS
    KEYWORDS
    european central bank covid-19 outbreak interest rates stimulus package european economy
    The Daily Sabah Newsletter
    Keep up to date with what’s happening in Turkey, it’s region and the world.
    You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
    Brazil's Dani Alves in action during the FIFA World Cup Qatar 2022 Round of 16 match between Brazil and South Korea at Stadium 974, Doha, Qatar, Dec. 5, 2022. (Getty Images Photo)

    Dani Alves remains in jail as new rape case's harrowing details unfold

    DANI-ALVES
    Through ground-penetrating radar scans conducted underneath Zerzevan Castle in Diyarbakır, massive structures belonging to Rome's 3,000-year-old garrison were detected, Diyarbakır, Türkiye, June 5, 2023. (IHA Photo)

    Ancient Roman garrison unearthed at Zerzevan Castle in Türkiye

    ZERZEVAN-CASTLE

    Turkish exporters hope to clinch record of over $267B in annual sales

    foreign-trade

    Türkiye's new foreign minister reiterates 'national vision'

    HAKAN-FİDAN
    Turkish task force for Qatar World Cup returns home after 3 months
    PHOTOGALLERY
    • POLITICS
    • Diplomacy
    • Legislation
    • War On Terror
    • EU Affairs
    • News Analysis
    • TÜRKİYE
    • Istanbul
    • Education
    • Investigations
    • Minorities
    • Diaspora
    • World
    • Mid-East
    • Europe
    • Americas
    • Asia Pacific
    • Africa
    • Syrian Crisis
    • İslamophobia
    • Business
    • Automotive
    • Economy
    • Energy
    • Finance
    • Tourism
    • Tech
    • Defense
    • Transportation
    • News Analysis
    • Lifestyle
    • Health
    • Environment
    • Travel
    • Food
    • Fashion
    • Science
    • Religion
    • History
    • Feature
    • Expat Corner
    • Arts
    • Cinema
    • Music
    • Events
    • Portrait
    • Performing Arts
    • Reviews
    • Sports
    • Football
    • Basketball
    • Motorsports
    • Tennis
    • Opinion
    • Columns
    • Op-Ed
    • Reader's Corner
    • Editorial
    • Photo gallery
    • Jobs
    • privacy
    • about us
    • contact us
    • RSS
    © Turkuvaz Haberleşme ve Yayıncılık 2021