ECB needs to take its time to prepare new bank loans: Nowotny

10 March, 2019, 06:23 | Author: Eric Barnett
  • The euro sinks to near a 21-month low against the US dollar today hurt by a series of dovish signals from the European Central Bank. — Reuters pic

The ECB will provide easier, cheaper access to credit for Eurozone banks, with further increases to interest rates ruled out for 2019. Since the advent of the quantitative easing program, four years ago, it was the most aggressive cut in the growth forecast by the European Central Bank.

The ECB left rates unchanged at 0% but was surprisingly downbeat, slashing Eurozone growth forecasts from 1.70% to 1.10%, lowering inflation forecasts with ECB President Draghi bemoaning "pervasive uncertainty" in the global economy. Europe's economic collapse comes as growth in Asia is also slowing down. The US managed to buck the trend, largely as a result of the stimulus provided by the Trump administration's tax cuts.

Draghi cited "factors. mostly of external source", including "the threat of protectionism" and "geopolitical considerations", and analysts pointed out that the eurozone was in a precarious position.

The stock market rally since the start of the year followed a torrid 2018, but this latest flurry of investment is at odds with 2019's disappointing economic data. Citic Securities Co. advised clients to sell the shares, saying they are "significantly overvalued" and could decline more than 50 percent over the next year.

The Stoxx Europe 600 Index sank 0.9 percent. In the third quarter of past year, the German economy contracted for this first time since 2015, with growth remaining flat in the last quarter.

According to Andrew Harker, associate director at IHS Markit, which publishes purchasing managers indexes that track business sentiment, its data suggested that "the manufacturing sector was the main source of the latest reduction, with industrial productivity decreasing to the greatest extent in nearly a decade".

Asia Pacific Market Open Talking Points Risk appetite deteriorated after dismal European Central Bank economic projections EUR/USD sunk through support levels, eyeing June 2017 lows next Markets eye China trade data to monitor impact of slowing growth Build confidence in your own EUR/USD strategy with the help of our free guide!

"Our own view is that the Chinese economy is slower than people generally think, but I think the world economy is probably slower than people think". Both the S&P 500 and the Dow Jones Industrial Average fell more than 1 percent, putting American stocks on track for their worst week of the year. The euro climbed after closing at its lowest level since 2017 on Thursday, when the European Central Bank slashed growth forecasts. If the situation continues to worsen, there is very little that the bank can do following this.



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