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05-04-2013, 06:47 AM
(This post was last modified: 05-04-2013, 06:48 AM by greengiraffe.)
Money, money everywhere, where shall thou find a home...
ECB ready to ease policy if needed, as BoJ launches monetary stimulus and BoE holds rates
Date
April 5, 2013 - 8:58AM
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Bank of Japan Governor Haruhiko Kuroda ... pointing at a chart projecting his quantitative and qualitative monetary easing plan. Photo: Reuters
European Central Bank President Mario Draghi said the bank stands ready to cut interest rates if the economy deteriorates further, and officials are considering additional measures to boost growth as the debt crisis enters its fourth year.
"Our monetary policy stance will remain accommodative for as long as needed," Draghi said at a press conference in Frankfurt today after the ECB kept its benchmark interest rate at a record low of 0.75 per cent. "We will assess all the incoming data in the coming weeks and we stand ready to act."
This is an unprecedented degree of monetary easing. We took all available steps we can think of
Bank of Japan Governor Haruhiko Kuroda
Draghi spoke hours after Bank of Japan Governor Haruhiko Kuroda began his unprecedented onslaught to end 15 years of deflation. The BOJ said it plans to purchase 7.5 trillion ($74.8 billion) yen of bonds a month and double the monetary base, which includes cash in circulation, in two years.
Mario Draghi, President of the European Central Bank ... following the meeting of the Governing Council. Photo: AFP
The Bank of England kept its main lending rate unchanged at 0.5 per cent and refrained from expanding its stimulus program.
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With doubts growing about Draghi's forecast for an economic recovery later this year, the ECB is looking at a range of measures including lower rates, more long-term loans to banks and a program to encourage lending to small- and medium-sized companies, three officials with knowledge of the deliberations said this week. The ECB president said today that officials are "looking at various instruments", though he stopped short of saying what they would be.
The yield on France's 10-year bond yield fell to a record low after Draghi's remarks, declining to 1.893 per cent, the lowest since Bloomberg started compiling data in 1990. The euro initially dropped before rebounding to $US1.2862 ($1.23), almost unchanged from its level at the start of the day.
'Highly Likely'
An interest-rate cut "now looks highly likely," said Howard Archer, chief European economist at IHS Global Insight in London. "Indeed, it is very possible that the ECB could trim interest rates to 0.5 per cent as soon as at its May policy meeting."
Draghi said risks to the economic outlook remain on the downside and inflation is "edging down well below" the ECB's 2 per cent target. It will slow to 1.3 per cent next year from 1.6 per cent this year, according to ECB forecasts.
"We are considering both standard and non-standard measures" to increase stimulus, Draghi said.
Bank of Japan
In Japan, new Bank of Japan Governor Haruhiko Kuroda committed the BOJ to open-ended asset buying and said the monetary base would nearly double to 270 trillion yen ($2.69 trillion) by the end of 2014, a dose of shock therapy officials hope will end two decades of stagnation.
The policy was viewed as a radical gamble to boost growth and lift inflation expectations and is unmatched in scope even by the US Federal Reserve's own quantitative easing programme.
The Fed may buy more debt, but since Japan's economy is about one-third the size of the US economy, Kuroda's plan looks even bolder.
"This is an unprecedented degree of monetary easing," a smiling Kuroda told a news conference after his first policy meeting at the helm of the central bank.
"We took all available steps we can think of. I'm confident that all necessary measures to achieve 2 per cent inflation in two years were taken today," he said.
Exit Struggle
In Europe, evidence is mounting that the 17-nation euro economy is struggling to exit a recession that began more than a year ago, partly as financial institutions restrict access to credit.
The ECB's measure of bank lending to the private sector fell for a 10th month in February, dropping 0.9 per cent from a year earlier. Euro-region manufacturing and services activity, measured by surveys of purchasing managers, contracted more than economists forecast in March.
"Weak economic activity has extended into the early part of the year and a gradual recovery is projected for the second half of this year, subject to downside risks," Draghi said. The consensus at today's meeting was not to cut rates "for the time being".
Draghi said that the ECB will examine other countries' experiences when assessing what further emergency measures to take.
Bank of England
In the UK, the Bank of England has employed the Funding for Lending Scheme to get credit flowing to companies, while Denmark's central bank has taken its deposit rate into negative territory, effectively charging financial institutions that park excess cash with it overnight.
Draghi stressed the ECB's "determination to fight" any speculation of a euro break-up after Cyprus last month became the fifth euro-area nation to secure a bailout. A botched first attempt to rescue Cyprus sent bank shares tumbling across the region and rattled confidence in policy makers' ability to tame the sovereign debt crisis. Draghi acknowledged that the initial response hadn't been "smart".
Bloomberg with Reuters
ECB ready to ease policy if needed, as BoJ launches monetary stimulus and BoE holds rates
Date
April 5, 2013 - 8:58AM
Pin Itsubmit to redditEmail articlePrintReprints & permissions
Bank of Japan Governor Haruhiko Kuroda ... pointing at a chart projecting his quantitative and qualitative monetary easing plan. Photo: Reuters
European Central Bank President Mario Draghi said the bank stands ready to cut interest rates if the economy deteriorates further, and officials are considering additional measures to boost growth as the debt crisis enters its fourth year.
"Our monetary policy stance will remain accommodative for as long as needed," Draghi said at a press conference in Frankfurt today after the ECB kept its benchmark interest rate at a record low of 0.75 per cent. "We will assess all the incoming data in the coming weeks and we stand ready to act."
This is an unprecedented degree of monetary easing. We took all available steps we can think of
Bank of Japan Governor Haruhiko Kuroda
Draghi spoke hours after Bank of Japan Governor Haruhiko Kuroda began his unprecedented onslaught to end 15 years of deflation. The BOJ said it plans to purchase 7.5 trillion ($74.8 billion) yen of bonds a month and double the monetary base, which includes cash in circulation, in two years.
Mario Draghi, President of the European Central Bank ... following the meeting of the Governing Council. Photo: AFP
The Bank of England kept its main lending rate unchanged at 0.5 per cent and refrained from expanding its stimulus program.
Advertisement
With doubts growing about Draghi's forecast for an economic recovery later this year, the ECB is looking at a range of measures including lower rates, more long-term loans to banks and a program to encourage lending to small- and medium-sized companies, three officials with knowledge of the deliberations said this week. The ECB president said today that officials are "looking at various instruments", though he stopped short of saying what they would be.
The yield on France's 10-year bond yield fell to a record low after Draghi's remarks, declining to 1.893 per cent, the lowest since Bloomberg started compiling data in 1990. The euro initially dropped before rebounding to $US1.2862 ($1.23), almost unchanged from its level at the start of the day.
'Highly Likely'
An interest-rate cut "now looks highly likely," said Howard Archer, chief European economist at IHS Global Insight in London. "Indeed, it is very possible that the ECB could trim interest rates to 0.5 per cent as soon as at its May policy meeting."
Draghi said risks to the economic outlook remain on the downside and inflation is "edging down well below" the ECB's 2 per cent target. It will slow to 1.3 per cent next year from 1.6 per cent this year, according to ECB forecasts.
"We are considering both standard and non-standard measures" to increase stimulus, Draghi said.
Bank of Japan
In Japan, new Bank of Japan Governor Haruhiko Kuroda committed the BOJ to open-ended asset buying and said the monetary base would nearly double to 270 trillion yen ($2.69 trillion) by the end of 2014, a dose of shock therapy officials hope will end two decades of stagnation.
The policy was viewed as a radical gamble to boost growth and lift inflation expectations and is unmatched in scope even by the US Federal Reserve's own quantitative easing programme.
The Fed may buy more debt, but since Japan's economy is about one-third the size of the US economy, Kuroda's plan looks even bolder.
"This is an unprecedented degree of monetary easing," a smiling Kuroda told a news conference after his first policy meeting at the helm of the central bank.
"We took all available steps we can think of. I'm confident that all necessary measures to achieve 2 per cent inflation in two years were taken today," he said.
Exit Struggle
In Europe, evidence is mounting that the 17-nation euro economy is struggling to exit a recession that began more than a year ago, partly as financial institutions restrict access to credit.
The ECB's measure of bank lending to the private sector fell for a 10th month in February, dropping 0.9 per cent from a year earlier. Euro-region manufacturing and services activity, measured by surveys of purchasing managers, contracted more than economists forecast in March.
"Weak economic activity has extended into the early part of the year and a gradual recovery is projected for the second half of this year, subject to downside risks," Draghi said. The consensus at today's meeting was not to cut rates "for the time being".
Draghi said that the ECB will examine other countries' experiences when assessing what further emergency measures to take.
Bank of England
In the UK, the Bank of England has employed the Funding for Lending Scheme to get credit flowing to companies, while Denmark's central bank has taken its deposit rate into negative territory, effectively charging financial institutions that park excess cash with it overnight.
Draghi stressed the ECB's "determination to fight" any speculation of a euro break-up after Cyprus last month became the fifth euro-area nation to secure a bailout. A botched first attempt to rescue Cyprus sent bank shares tumbling across the region and rattled confidence in policy makers' ability to tame the sovereign debt crisis. Draghi acknowledged that the initial response hadn't been "smart".
Bloomberg with Reuters