The European Central Bank (ECB) could take its first steps on Thursday towards beefing up its monetary stimulus action plan, as a recession unleashed by the coronavirus crisis engulfs the eurozone.
Analysts expect the Frankfurt-based ECB to announce it will maintain interest rates at historic lows, leaving the bank’s benchmark refinancing rate at zero and its deposit rate, which sets the rate for banks parking funds at the ECB, at minus 0.5 per cent.
But financial markets will be looking to ECB chief Christine Lagarde’s Thursday press conference for indications about the bank’s plans for its “pandemic emergency” programme.
While analysts have not ruled out the ECB acting again this week, most expect Lagarde to signal moves for the bank to top up its monetary stimulus programme at its June meeting.
Last month, the Frankfurt-based ECB fired off a 750-billion-euro (815-billion-dollar) bazooka of bond-buying aimed at stabilizing the 19-member eurozone economy.
But, since then, bond yields have come under renewed pressure, oil prices have collapsed, and economic confidence has essentially evaporated across the 19-member currency bloc as the region faces up to a recession of historic proportions.
The recent dramatic fall in oil prices has also raised the threat of the eurozone stumbling into a damaging period of deflation, adding to the pressure on the ECB to expand its bond-buying scheme.
Lagarde’s Thursday press conference is also to be conducted against the backdrop of the release of a slew of key eurozone economic data, including first quarter gross domestic product, corporate liquidity, unemployment and inflation. (dpa/NAN)
