The european central bank disappointed the market laying at hidden danger for the global stock market in may although the european central. Bank announced additional liquidity operations it did not further increase the quantitative easing and kept all other financial instruments unchanged stocks bonds and foreign exchange markets were all disappointed the european central bank. Will have a series of new non-targeted emergency long-term refinancing operations pltros before september 2021 there will be seven rounds of pltros after several fine-tuning of tltro at the last meeting this is another. Attempt to provide more liquidity for the banking industry and even. The real economy earlier the european central bank announced that it would keep the three major interest rates unchanged while continuing to relax. The conditions for the third round of targeted long-term refinancing operations tltro which will increase the scale of asset purchases by 20 billion euros per month this year the european.
Central bank stated that the third round of targeted long-term refinancing operations tltro. Interest rates can be 50 basis points lower than the deposit mechanism interest rate. Or minus one percent if necessary bonds will continue to be purchased to strengthen the regulatory impact of.
The policy rate stop buying bonds shortly before raising interest rates as the. Epidemic spread in europe the european central bank has deployed a.
Large-scale stimulus plan to alleviate some of the economic shocks in march as part of an emergency purchase. Plan pepp of 750 billion euros 813 billion dollars the central bank began to purchase government bonds and reduce the cost of commercial banks supporting loan activities european central bank president. Christine legardi said in march our commitment to the euro has no limits nonetheless. Borrowing costs in peripheral countries such as italy have risen in recent weeks because of market participants concerned sustainability of long-term debt the decision to leave all other tools unchanged shows that the european. Central bank first wants to assess all the measures taken recently it may also want.
To keep some bullets it is true that the market also needs these bullets because today’s gdp figures give the market a preliminary impression of the severity of the eurozone. Crisis the ecb keeps its bond purchase plan unchanged which is far from what the market needs the data shows that the scale of the current stimulus is not enough under the circumstances of. Rapid fund disbursement and severe situation the european central bank announced a large-scale emergency purchase plan pepp at an emergency meeting on march 18 but the funds were quickly used up. As the european central bank disappointed investors the euro fell the stock market fell and the italian german government bond yield spread also widened the increase in risk aversion in. The stock market and the strengthening of the dollar have brought some challenges to the risk asset sentiment in the coming days and even weeks european central bank president legardi just said that the. Coronavirus epidemic has plunged the eurozone economy into an unprecedented recession and the economy may deteriorate further before the recovery phase begins.
This trend shows that the labor market is rapidly deteriorating and economic activity is contracting severely she said at. A press conference after the ecb policy meeting that the ecb’s forecast shows that the gdp of the eurozone may fall by 5. To 12 this year eurozone recession is worse than the us the economy of the eurozone contracted. At the fastest rate in history in the first quarter and the contraction rate exceeded that of the united states because the lockdown. That restricted the spread of the virus brought many commercial activities to a standstill the european union statistical agency said that compared with the fourth quarter of 2019 the eurozone economy contracted by 3.8.
Percent in the first quarter calculated at an annual rate the eurozone contracted by 14.4 percent in the first quarter surpassing the 4.8 contraction of the us economy during the same period this largely reflects. The fact that the european lockdown started earlier and has a wider scope in addition the. Huge difference in the scale of contraction between the north and the south indicates that there may be. Long-term pressure within the euro area austria reported a 9.6 annual decline in gdp while italy sgdp fell 17.6 percent and spain. S 19.2 percent germany has no plans to announce its economic growth expectations by mid-may but economists estimate that germany s. Contraction is closer to austria than to spain the widening economic divide poses a challenge to the euro s long-term viability as it exacerbates the.
Disagreement about how and whether the consequences of the epidemic. Can be shared france is one of the hardest hit areas that announced the national lockdown in mid-march the country s first quarter gdp contraction rate reached 21 in the first.
Quarter the largest decline since 1949 surpassing the economic decline in the second. Quarter of 1968 when france closed most of the economy due to factory strikes and student activities but economists expect the fall in the second quarter to be even greater since the. French government did not begin to relax restrictions until may 11th the economy in the second quarter will be more severely lost than in. The first quarter although some restrictions have been relaxed in some areas of the euro area in the three months to june the economies of the euro area. Countries may also experience greater contraction activity is expected to pick up in the second half of the year but economists no longer expect all.
Output lost in the first six months to recover quickly one. Unknown factor is how consumers will quickly return to normal spending behavior patterns after the restrictions are lifted olivier vina an economist at hsbc said worry about the resurgence may make. Families more cautious eurostat said on thursday that 197 000 workers were unemployed in the eurozone in march raising. The unemployment rate from 7.3 percent to 7.4 percent the u.s unemployment rate rose from 3.5 to 4.4 percent that month many countries have modeled on germany s fiscal stimulus plan under which.
The government remits directly to companies so that they can continue to pay employees the german labor office estimated on thursday that. The plan will soon help pay 10.1 million workers wages which is three times the amount after the financial crisis detlef shiel chairman of the agency said the pandemic will lead to. The worst recession in germany since the 1940s which has left the labor market in serious trouble.