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ECB chief Lagarde tipped to flag fresh stimulus

BERLIN: European Central Bank (ECB) President Christine Lagarde is expected to signal ECB plans to launch another round of stimulus, possibly as early as December, as governments ramp up restrictions amid a dramatic surge in new coronavirus cases.

Analysts are expecting the ECB to leave interest rates at historic lows and to maintain its emergency pandemic bond-buying programme at 1.35 trillion euros ($1.6 trillion). The programme is currently due to end in June 2021. “ECB policy is likely to remain unchanged today’’, ING Bank wrote in a note to clients.

“However, we expect to receive clear hints with regard to upcoming action.” Financial markets are expecting Lagarde could use her Thursday press conference to pave the way for fresh monetary stimulus possibly as early as December.

Lagarde is set to unveil the ECB’s new inflation and growth forecasts following the bank’s December meeting, with the projections often forming the basis of bank’s decision making. The ECB chief’s Thursday press conference follows a steady stream of data pointing to the 19-member euro zone economy having lost momentum in recent months, after it bounced back from a deep trough earlier this year triggered by the global pandemic.

While industrial production in the currency bloc slowed to just 0.7 per cent in August from a sharp 5 per cent in July, consumer confidence in the region slumped in October amid unemployment fears, according to a European Commission survey released last week.

Public health figures also show the virus raging across the euro zone, forcing governments to launch fresh restrictions on economic and public life. European stocks opened marginally higher on Thursday ahead of the ECB’s rate announcement after a major sell off on Wednesday in the wake of Germany and France announcing tough anti-pandemic measures.

After closing down a hefty 2.97 per cent on Wednesday, the blue chip Euro-Stoxx 50 edged up 0.47 per cent in opening trading on Thursday.

Equally worrying for the ECB is that data to be released on Friday is forecast to show that annual inflation — its key monetary policy measure — remained in negative territory for the third month in October at minus 0.3 per cent. Consumer prices have now undershot the ECB’s annual inflation target of just below 2 per cent for the last seven years. — dpa

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