Interest rates will stay high 'as long as necessary,' the European Central Bank's leader says
The head of the European Central Bank says interest rates will stay high long enough to restrict business activity for “as long as necessary” to beat back inflation because upward pressure on prices “remains strong.”.
Lagarde: US-China split may weaken growth and fuel inflation
The fragmentation of the world economy into rival blocs led by the United States and China threatens to destabilize global commerce, increase inflation and weaken growth, Christine Lagarde, the president of the European Central Bank, warned Monday.
Europe's central bank backs big rate hike despite bank chaos
The European Central Bank has carried through with a large interest rate increase, brushing aside predictions it might dial back as U.S. bank collapses and troubles at Credit Suisse feed fears about the impact of higher rates on the global banking system.
Europe's outlook "darkening," ECB head hedges on recession
The head of the European Central Bank says the economic outlook “is darkening” and she expects business activity to “slow substantially” in the coming months as high energy and food prices pushed up by the war in Ukraine sap consumer spending power.
European Central Bank vows backstop against market turmoil
The European Central Bank has vowed to come up with a new, unspecified market backstop that could be used to buffer some countries against bond market turmoil similar to what shook the 19-country eurozone during a debt crisis more than a decade ago.
Powell reinforces expectations of sharp rate hike next month
The Federal Reserve must move faster than it has in the past to rein in high inflation, Chair Jerome Powell said, signaling that sharp interest rate increases are likely in the coming months, beginning at the Fed’s next policy meeting in May.
European Central Bank keeps pandemic support going
The European Central Bank has decided to keep its pandemic stimulus efforts unchanged even as consumer prices spike and central banks in other parts of the world look to dial back support as their economies bounce back from the worst of the COVID-19 outbreak.
Europe leaves stimulus running hot ahead of recovery
The European Central Bank is leaving its key pandemic support for the economy running full blast even as the economy shows signs of recovery thanks to lower virus cases and fewer restrictions on activity in the 19 countries that use the euro currency.
New challenge for the Powell Fed: A strengthening economy
The rise in the 10-year yield in recent weeks “caught my attention," Powell acknowledged earlier this month. AdIn anticipation of faster growth and inflation, investors have priced in at least three Fed rate hikes by 2023 — a much earlier lift-off than the Fed itself has forecast. Seeking to reassure investors, Fed officials have said they regard the rise in the 10-year yield as a positive sign, evidence that the financial markets expect the economy to steadily strengthen. As a consequence, Fed officials will likely boost their projections for economic growth for this year and for 2022, lower their estimates for unemployment and raise their expectations for inflation. Fed officials may project economic growth this year of as much as 5%, economists say, up from their December estimate of 4.2%.
Lagging US, Europe speeds up help for virus-hit economy
The rise in longer-term borrowing rates is regarded as a spillover from the U.S., where the economic recovery is expected to be faster. By contrast, the eurozone economy is not expected to recover until mid-2022, held back by a slow vaccine rollout and lower levels of government relief spending compared with the U.S. ECB President Christine Lagarde told a news conference that the rise in market borrowing rates, “if left unchecked, could translate into a premature tightening of financial conditions for all sectors of the economy. AdThe bond purchases have the effect of pushing down bond yields, which are used as benchmarks for borrowing across the region. Lagarde didn't specify an amount for the accelerated bond purchases.
European Central Bank stimulus on track as economy struggles
FRANKFURT – With more than a trillion euros in stimulus still in the pipeline to the economy, the European Central Bank left its key bond-purchase program unchanged Thursday as the 19-country eurozone endures a winter economic slowdown due to the pandemic. ECB President Christine Lagarde told a news conference that the economy likely contracted in the last three months of 2020 and the outlook going forward faces risks. The economy is being propped up by massive support from the ECB, national governments, and the EU. The European Union’s executive commission forecasts that the eurozone economy shrank 7.8% last year. Those are zero for short term loans from the ECB to banks, and minus 0.5% on deposits left overnight at the ECB by banks.
Europe gets new blast of stimulus to counter virus surge
The 25-member governing council decided Thursday to increase its bond purchase stimulus by 500 billion euros, to 1.85 trillion euros ($2.2 trillion). The bond purchases help keep credit affordable and available across the economy for consumers, businesses and governments. That is critically important to help businesses survive until the pandemic eases, and to support governments that are borrowing heavily to pay for aid to businesses and workers. Governments have also marshalled support at the EU level by agreeing to borrow together to create a 750 billion-euro recovery fund. The deposit rate on money banks leave overnight at the ECB is minus 0.5% rate, a penalty that pushes them to lend the money instead.
As infections rise, European Central Bank prepares stimulus
The bank could add a half-trillion euros or more to its existing bond purchases. That means the central bank will vacuum up much of the new debt being issued by hard-pressed governments, lowering the risk of a new eurozone debt crisis. She subsequently pointed to the current, 1.35 trillion ($1.58 trillion) pandemic emergency bond purchase program as a likely place for action. Yet its borrowing costs remain low and markets are calm despite the pandemic, and analysts say ECB support plays a crucial role in that. Without ECB support, a debt crisis could loom.
Top central bankers: Economy needs help despite vaccine news
FRANKFURT – Three of the globe's top central bankers said their economies continue to need help despite progress toward a COVID-19 vaccine, with U.S. Federal Reserve Chair Jerome Powell saying that the U.S. Congress “may need to do more” to cushion the blow from the pandemic. All three central banks have deployed large-scale stimulus such as interest rate cuts and bond purchases that aim to keep borrowing costs affordable for businesses. A multi-trillion-dollar stimulus, enacted in the spring, had helped sustain jobless Americans and ailing businesses but has since expired. “We’re recovering to a different economy,” he said, and there will be a substantial number of workers who will need support as the economy is changed by the pandemic. The Fed is buying $120 billion a month in bonds — $80 billion in Treasurys and $40 billion in mortgage bonds — to try to keep long-term borrowing costs low.
Lagarde: Recovery could be stop-and-go despite vaccine news
FRANKFURT – European Central Bank head Christine Lagarde warned Wednesday that the economy could face a “bumpy,” “stop-start” recovery despite good news about vaccine development. The European Commission has said it plans to secure up to 300 million doses of the experimental vaccine developed by Pfizer and BioNTech. Lagarde said policymakers must ensure that the exceptional downturn remains a one-off blow to the economy and does not turn into a recession that feeds on itself. Analysts have been predicting more stimulus as a renewed increase in virus infections and partial lockdowns weigh on economic growth. Inflation was at minus 0.3% in October and continues to lag the ECB’s goal of below but close to 2%.
The Latest: Cases soaring in New Delhi ahead of festival
New Delhi reported 8,593 newly confirmed cases Thursday, up from 7,830 cases a day earlier as people crowd shopping areas ahead of Saturday’s observances of Diwali — an important Hindu festival of lights. The Delhi government projects that new coronavirus cases will be nearly 12,000 daily by the end of November. India’s infections overall continue came in at 47,905 new cases, a rise from 44,281 cases reported Wednesday. The daily death toll represented a more than 55% jump from Minnesota’s previous record of 36 deaths, reported on Friday. State health officials reported 1,039 new coronavirus cases on Wednesday, and a daily positivity rate of more than 18% for the second consecutive day.
EU cuts 2021 economic outlook as virus spreads
BRUSSELS – The European Union's executive commission on Thursday lowered its growth forecast for the economic rebound from the coronavirus pandemic next year and said the economy wouldn’t reach pre-virus levels until 2023. The regular autumn forecast foresees the economy of the 19 countries that use the euro growing only 4.2% in 2021 instead of the previous estimate of 6.1%. The downgrade comes as governments record increasing numbers of infections, sick people in hospitals and deaths, leading to renewed restrictions on businesses and activity. Third-quarter GDP increased by 12.7% from the previous quarter, the largest increase since statistics started being kept in 1995. The European Central Bank is pumping 1.35 trillion euros ($1.58 trillion) into the economy through regular bond purchases, a step aimed at keeping credit flowing affordably to businesses.
Eurozone growth soars record 12.7% but fears grow for winter
New figures released Friday Oct. 30, 2020, show that the European economy grew by an unexpectedly large 12.7% in the third quarter as companies reopened after severe coronavirus lockdowns. Re-openings there led to strong third-quarter growth of 7.4% that recovered much of the drop from the first part of the year — but didn't dispel fears for the winter months. The European rebound, reflected in figures released Friday by EU statistics agency Eurostat, was the largest increase since statistics started being kept in 1995. It followed an 11.8% contraction in the second quarter in the 19 European Union member countries that use the euro currency. The rebound was led by France, with an enormous 18.2% increase, followed by Spain with 16.7% and Italy with 16.1%.
European Central Bank: Just wait until December
FRANKFURT – The European Central Bank held off from strengthening its current economic stimulus but its President Christine Lagarde said there was “little doubt” that more action would be coming at its December meeting as surging coronavirus infections and new restrictions on activity threaten Europe’s economy. “We have little doubt... that the circumstances will warrant the recalibration and the implementation of this recalibrated package," Lagarde said. Analysts believe that is one reason the bank could take no action Thursday, since there already more stimulus still in the pipeline. Massive ECB stimulus and new spending by governments has helped ward off turmoil on financial markets and cushion the downturn. Airlines, hotels, restaurants and other businesses big and small have suffered a devastating drop in activity.
Europe's central banker: Recovery 'risks losing momentum'
FRANKFURT – The head of the European Central Bank says the economic recovery from the coronavirus pandemic “risks losing momentum” due to a second wave of infections and that more stimulus could be added if necessary. “Since the rebound we saw over the summer, the recovery has been uneven, uncertain and incomplete and now risks losing momentum,” she said, adding that “the options in our toolbox have not been exhausted. It's rate for short-term lending to banks is zero; for deposits left overnight from banks, the rate is negative 0.5 percent. The negative rate means banks pay a penalty for leaving money at the central bank instead of lending it to business. The ECB's steps are credited with helping keep the coronavirus outbreak from turning into a crisis for financial markets.
Europe's central bank moves toward introducing digital euro
The central bank issued a comprehensive report outlining the reasons why it might need to take the step. It said no decision has been made, and that any digital euro would complement cash, not replace it. We should be prepared to issue a digital euro, should the need arise.”A digital euro would be different from current cashless payment systems run by the private sector because it would be official central bank money - trustable, risk-free and likely less expensive to use. A central bank digital currency could also be used offline, for instance, to transfer small amounts between individuals using digital wallets on their smartphones and a Bluetooth connection. China’s central bank is already testing an official digital currency, while the central bank of Sweden says it has initiated a pilot project.
Inflation slump in Europe could presage more stimulus
Excluding volatile food and fuel prices, the inflation rate was 0.2% in September, down from 0.4% in August. The so-called core inflation figure is often considered the better measure of price movements in the economy as a whole. Rosie Colthorpe, European economist at Oxford Economics, pointed to temporary factors lowering inflation, such as a cut in value-added tax in Germany as part of that country's crisis stimulus. Economists say the pandemic is contributing to low inflation as merchants keep prices down in hopes of attracting customers amid restrictions on travel and activity. The ECB, based in Frankfurt, Germany, is the chief monetary authority for the EU member countries that use the euro.
Central bank head: Europe's recovery uncertain, incomplete
FRANKFURT – The head of the European Central Bank says that the economy is rebounding but that the recovery remains uncertain, incomplete and dependent on containing the virus outbreak. But she added that “the strength of the recovery remains very uncertain, as well as uneven and incomplete.”“It continues to be highly dependent on the future evolution of the pandemic and the success of containment policies,” she said. The ECB is pumping 1.35 trillion euros ($1.6 trillion) in newly printed money into the economy through ongoing bond purchases through the end of next year. That is a large-scaled monetary stimulus aimed at preventing the pandemic from causing turmoil in financial markets, and at keeping borrowing costs low for companies to help support growth. The European Central Bank is the chief monetary authority for the 19 countries that use the euro, analogous to the Federal Reserve in the U.S. or the Bank of England in Britain.
European Central Bank keeps stimulus policies on hold
FRANKFURT The European Central Bank left its key stimulus settings unchanged with almost a trillion euros (dollars) in stimulus still in the pipeline to bolster the eurozones rebound from the severe coronavirus shutdowns. The pause may only be a prelude to even more stimulus later this year as the ECB and global counterparts such as the US Federal Reserve make clear their determination to do maintain their massive support to limit the damage from the virus outbreak. The banks governing council made the decision at a meeting Thursday. Markets were waiting to hear ECB head Christine Lagardes outlook on possible threats to the economic rebound from a stronger euro, which can hurt exporters, and from weak inflation, which indicates weak demand. Many analyst think that the ECB will add to its pandemic emergency bond purchase stimulus at its December meeting, when it will have new inflation and growth forecasts.
Falling prices flash warning light for Europe's economy
A 0.2% annual drop in prices in August in the 19 countries that use the euro underlined that demand from unsettled consumers across the economy remains weak despite the reopening of many businesses. The economy plunged by a dizzying 11.8% in the second quarter from the first quarter. That means it doesnt represent outright deflation, a dreaded downward price spiral that can become a long-term trap for an economy. He expects a partial rebound in prices in the near term followed by a period of subdued inflation rather than a sustained fall in prices. He predicted the bank would raise the amount of pandemic stimulus purchases this year.
European Central Bank keeps monetary stimulus on track
FRANKFURT The European Central Bank has left its monetary stimulus programs unchanged ahead of a key meeting of EU leaders on a recovery plan meant to help the economy bounce back from the coronavirus shutdowns. The ECB held off providing new measures Thursday after unleashing in recent weeks massive doses of monetary stimulus that have helped keep borrowing costs for companies and consumers at roughly pre-pandemic levels. There is also interest in whether the ECB could increase the 1.35 trillion euros figure for the pandemic emergency purchases if needed. Average borrowing costs for big eurozone governments rose during March but have since returned to pre-pandemic levels. The ECB left its other stimulus settings unchanged on Thursday.
European Central Bank nearly doubles pandemic support scheme
FRANKFURT The European Central Bank has boosted its pandemic emergency support program by 600 billion euros to 1.35 trillion euros ($1.5 trillion) in an effort to keep affordable credit flowing to the economy during the steep downturn caused by the virus outbreak. Under the pandemic support program, the ECB buys corporate and government bonds and other financial assets from banks, paying with newly created money. That helps lower longer-term interest rates, keeping the pandemic from drying up needed funding for borrowers. Italy's lockdown will cost it lost tax revenues and additional spending to support the economy. The bank has also set up long-term offers of credit to banks at even lower rates if they show they are lending to companies.
With Italy at risk, Europe Central Bank could boost stimulus
Under the program, the central bank buys government and corporate bonds with newly printed money, a step that helps keep a lid on borrowing costs for businesses and governments. Holger Schmieding, chief economist at Berenberg bank, estimates there is a 60% chance that the central bank will decide to boost its pandemic stimulus program at Thursday's meeting. If it doesn't, he says the central bank could so in July. The ECB could also lengthen the pandemic stimulus program's duration; right now it is slated to run through the end of the year. Lagarde has said the ECB is accountable to the EU parliament and the European Court of Justice, which had approved the purchases.
Swiss banks charge millionaires to store their money
Joe Raedle/Getty Images(CNN) - Instead of paying interest on deposits, Swiss banks are starting to charge wealthy customers to stash their cash. Credit Suisse said Friday that the bank would apply a negative 0.75% interest rate to balances above 2 million Swiss francs ($2 million). This means that if an individual client or business holds 3 million Swiss francs ($3 million) with the bank for one year, they would be charged a fee of 7,500 Swiss francs ($7,600). For business customers holding more than 10 million francs ($10.1 million), the levy on funds above that mark rises to 0.85%. With no end to negative rates in sight, frustrated Swiss banks are passing some of the pain to their most affluent customers.
Dow set to fall as investors get nervous about Europe, trade
Spencer Platt/Getty Images(CNN) - The Dow and U.S. stock futures are pointing to a mixed open following weaker-than-expected economic data in Europe and renewed fears about the trade war. The manufacturing PMI showed a worse-than-expected contraction. In Germany, Europe's biggest economy, the manufacturing sector contracted too. Bond prices rose and yields slipped, with the 10-year Treasury yield at 1.697%. Gold prices rose, climbing 0.8% to $1,519 an ounce.
EU picks women for top jobs after marathon negotiations
Wes Little/CNN(CNN) - Europe's leaders have agreed to give two of the top four European Union jobs to women, but only after a marathon set of talks that exposed the continent's simmering divisions. Von Der Leyen's role must be confirmed by a vote in the European Parliament. If elected, she would be the first woman to lead the European Commission. The choice of Von Der Leyen, seen as a hawkish conservative, was designed to placate Hungary's hardline leader Victor Orban. The parliament's socialist group was said to be infuriated by the candidacy of Von Der Leyen as president of the European Commission, the bloc's executive body.
S&P 500 on track to open above record
A trader signals an offer in the S&P 500 stock index futures pit at the Chicago Mercantile Exchange. (CNN) - The S&P 500 closed at an all-time high on Tuesday, and it looks like the index could climb even higher in Wednesday's shortened trading session. At Tuesday's record close, the index stood at 2973 points, having surpassed a high set on Monday. A global shift towards looser monetary policy is also helping stocks, as lower interest rates make it cheaper for companies to incur debt. The president has long been critical of the Fed and its Chairman Jerome Powell, saying that lower interest rates would help boost the economy.
European Council taps first woman to lead central bank
(CNN) - Christine Lagarde, head of the International Monetary Fund, has been tapped as the next leader of the European Central Bank. The European Council announced Lagarde's nomination Tuesday. Lagarde, a surprise pick, would be the first woman to lead the central bank and one of few women to lead such an institution globally. Following the announcement, Lagarde, who is French, said she would temporarily relinquish her duties as managing director of the IMF during the nomination period. Donald Tusk, the president of the European Council, cited Lagarde's international experience during a press conference, saying she would make a "perfect" president of the ECB.