ECB Minutes Could Reveal Plans To Revive QE

The European Central Bank will be releasing the meeting minutes from the July 25th monetary policy meeting. Typically, meeting minutes don’t reveal much information during periods where the central bank is maintaining the status quo.

However, this time, the ECB announced plans to restart its monetary policy easing program. The central bank, nevertheless, did say that it expects interest rates to remain at the current levels at least through the first half of next year.

ECB President Mario Draghi noted at the press conference that a significant amount of stimulus might be necessary. But he ruled out the notion that the euro area is slipping into a recession.

The eurozone’s economy has been in a steady decline since late last year. This came just after GDP growth was starting to show signs of rising. As a result, the ECB ended its quantitative easing program in December 2018. But that seems to have been a premature move in hindsight.

Economic growth faltered due to a mixture of factors. Firstly, it started with the auto-emission rules which hit the German auto industry hard.

As the powerhouse of Europe, the slowdown in Germany soon started to feed into other regional economies. Inflation, which had shown signs of rising, also started to fall. Furthermore, global headwinds started to rise.

The US and China trade spat have dented sentiment all over. This is evident from the slower manufacturing across major economies, including the US, China, and the eurozone.

For the moment, the ECB joins the ranks of other central banks such as the RBA, the RBNZ, and the Fed to a certain extent, in giving dovish forward guidance. The Bank of Canada remains the sole central bank which hasn’t yet cut interest rates so far.

Focus on ECB’s QE Plans

The release of the monetary policy meeting minutes will reveal some insights into the central bank’s intentions.

At the July meeting, ECB officials said they were looking at various options. These include the QE program, the Targeted Long Term Refinancing operations or TLTRO program.

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