{"id":1889,"date":"2018-10-28T16:56:29","date_gmt":"2018-10-28T16:56:29","guid":{"rendered":"http:\/\/euromenaenergy.com\/?p=1889"},"modified":"2018-10-28T16:56:29","modified_gmt":"2018-10-28T16:56:29","slug":"ecb-sticks-to-stimulus-exit-downplaying-uncertainties","status":"publish","type":"post","link":"https:\/\/emimer.com\/?p=1889","title":{"rendered":"ECB sticks to stimulus exit, downplaying uncertainties"},"content":{"rendered":"<div class=\"subtitel col-lg-12\">\n<p>Reuters\/Frankfurt<\/p>\n<\/div>\n<p>The European Central Bank stuck to plans yesterday to claw back unprecedented stimulus, even as the growth outlook continues to darken and political turmoil in Italy looms large over the currency bloc.<br \/>\nHaving exhausted much of its firepower with years of support, the ECB reaffirmed that its \u20ac2.6tn ($3tn) asset purchase scheme will end this year and interest rates could rise after next summer, sticking to guidance first unveiled in June and repeated at every meeting since.<br \/>\nWhile he acknowledged a loss of growth momentum and a \u201cbunch of uncertainties\u201d from trade protectionism and market volatility, ECB President Mario Draghi played down concerns, arguing that the eurozone was merely returning to a normal or natural pace of expansion after an exceptional 2017.<br \/>\n\u201cWe\u2019re talking about weaker momentum, not a downturn,\u201d Draghi told a news conference after policymakers decided to maintain a long-standing assessment that growth risks were \u201cbroadly balanced\u201d.<br \/>\n\u201cIs this enough of a change to make us change the baseline scenario? The answer is \u2018No\u2019,\u201d he said, adding that the ECB did not even contemplate extending its bond purchase programme, which has depressed borrowing costs and revived growth.<br \/>\nThe comments appeared to confirm already solid expectations that the ECB will not go back on its pledge to end bond purchases by the close of the year, even if the growth outlook continues to weaken.<br \/>\n\u201cThe ECB remains highly determined to bring net asset purchases to an end,\u201d ING economist Carsten Brzeski said.\u201d<br \/>\nIt would require a severe downturn of the economy, not only weaker momentum, in the coming six weeks for the ECB to alter its course.\u201d<br \/>\nFocusing on inflation, the bank\u2019s primary mandate, Draghi struck a positive tone, arguing that wage growth was a \u201cvery comforting\u201d sign and that policymakers remained confident that price growth will rise.<br \/>\nBut despite the hawkish message \u2014 which included an upbeat assessment of firmer wage pressures \u2014 the euro slipped on his comment that Europe\u2019s monetary union remained \u201cfragile\u201d as long as measures to shore up existing structures were not complete.<br \/>\n\u201cAnd when I say completed, I mean the banking union, I mean the capital market union,\u201d he added of measures initiated as a result of the sovereign debt crisis of almost a decade ago but which have foundered on a lack of consensus among member states.<br \/>\nThe single currency slipped 0.1% on the day to $1.138 after having earlier reached a session-high of $1.143.<br \/>\nWith the EU having taken the unprecedented step of rejecting Italy\u2019s budget this week, Draghi was quizzed at length about the escalating political fight between Rome and Brussels.<br \/>\nHe made it abundantly clear that the ECB would not come to Italy\u2019s aid.<br \/>\nHimself an Italian, Draghi said he was confident compromise would be reached between Brussels and Rome and noted how much the stand-off was already costing Italy because of the rising yield on its government debt.<br \/>\n\u201cOur mandate&#8230; is a mandate towards price stability, not towards financing governments\u2019 deficits,\u201d Draghi said.<br \/>\nHe said rising bond yields were already eating into Italy\u2019s fiscal capacity, suggesting that attempts to raise spending would be counterproductive as investors will punish Rome for spending too much.<br \/>\nWith a debt to GDP ratio of 130%, Italy is the eurozone\u2019s second most indebted country after Greece, and under its rejected budget proposal, this debt level is unlikely to fall.<br \/>\n\u201cI\u2019m still confident an agreement will be found,\u201d Draghi added.<br \/>\nAsked about the risk that a fall in the value of Italian government bonds could erode the capital positions of some banks that hold them, he said: \u201cI don\u2019t have a crystal ball&#8230;<br \/>\nThese bonds are in the banks\u2019 portfolios.<br \/>\nThey are denting into the capital position of the banks.<br \/>\nEconomists said the message to Rome was clear: that the ECB will not come to its aid and it should prepare for life after years of central bank support.<br \/>\n\u201cThe ECB is not about to run to Italy\u2019s rescue, even if market conditions deteriorated further,\u201d Nordea economist Jan von Gerich said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Reuters\/Frankfurt The European Central Bank stuck to plans yesterday to claw back unprecedented stimulus, even as the growth outlook continues to darken and political turmoil in Italy looms large over the currency&#8230;<\/p>\n","protected":false},"author":1,"featured_media":1901,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[46,57,90,96,107,137,139,160,174,184,201,202,209,232,233,244,246,249,256,267,277,279,288],"class_list":["post-1889","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-aramco","tag-baroudi","tag-democracy","tag-doha","tag-embargo","tag-gas","tag-gazprom","tag-international-maritime-disputes","tag-lebanon","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-putin","tag-qatar","tag-rosneft","tag-roudi","tag-russia","tag-saudi","tag-straddling-hydrocarbons-reserves","tag-total","tag-trump","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/1889","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1889"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/1889\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/1901"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1889"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1889"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1889"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}