No sooner will Mario Draghi return from his summer vacation than he’ll be looking to boost euro-area stimulus yet again, economists predict.
Despite unprecedented measures by the European Central Bank president so far, Bloomberg’s survey of 47 analysts who cover the institution showed more than 60 percent think he isn’t yet done. The most likely date for fresh action was put as the Sept. 8 policy meeting, though some predicted it could happen as early as June. No new stimulus is expected when officials meet this Thursday.
Economists saw little scope for much more in rate cuts though. Most agreed with the Governing Council’s view that the effective lower bound for the deposit rate will soon be reached. The analysts put that limit at minus 0.5 percent and 62 percent said if the ECB does reduce the rate again, the central bank will introduce an exemption system to mitigate the impact on the banking system. The benchmark rate, now at zero, can’t be cut any lower, the survey showed.
China’s central bank is signaling less of an appetite for expanding monetary stimulus following evidence of an acceleration in growth that has led some private economists to upgrade their forecasts.
Late Tuesday, PBOC research bureau chief economist Ma Jun said in a briefing with local media that future policy operations, while observing the need to continue supporting growth, will also pay attention to heading off macroeconomic risks -- especially an over-expansion of corporate leverage.
When Bank of Japan policy makers meet next week, one factor weighing on their decision whether to provide more economic stimulus will be signals coming out of the Federal Reserve meeting the day before.
BOJ Gov. Haruhiko Kuroda, in a recent interview with The Wall Street Journal, noted how the Fed’s plans to raise interest rates more gradually have helped drive up the value of the yen and could undermine the BOJ’s efforts to stoke inflation in Japan.
“Many market economists say that the Federal Reserve’s monetary policy, particularly its…slower pace of interest hikes in coming months and quarters may have affected the exchange rate of the dollar,” Kuroda said in the Saturday session.
“We…continue to carefully monitor and assess its impact on the inflation trend,” Kuroda said, referring to the yen’s appreciation. “We would not hesitate to further ease our monetary conditions.”
Crude futures fell on Wednesday after Kuwaiti oil workers ended a three-day strike that had cut the nation's crude output by around half, with worries about an oversupplied market returning to the fore. Concerns about an oil surplus were also reinforced by industry data that showed U.S. stockpiles rose last week.
Brent crude futures LCOc1 were down 82 cents at $43.21 a barrel at 0700 GMT.
U.S. crude CLc1 was down 94, or more than 2 percent, at $40.14, after dipping below $40 earlier.
Reference: MarketWatch, Bloomberg, Reuters
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