Recently, the ECB’s (European Central Bank) vice president asserted that another large bond-buying program can be an alternative if inflation in the region does not attain its intended target. The market players are watching ECB amid apprehensions about progress in the 19-member region. Mario Draghi—ECB’s President—said with an insolently dovish tone, that if the financial situation gets worse in the coming few months the bank will announce new stimulus. While speaking to CNBC, Luis de Guindos—ECB’s Vice President—added to Draghi’s remarks and outlined some potential measures the central bank can implement.
“We have a broad range of instruments accessible such as forward management, targeted longer-term refinancing operations and the re-investment of the maturities of balance sheets. So there is a plenty range of instruments that we can use, and quantitative easing is one of them,” De Guindos said. The ECB anticipates “lingering softness” in the short-time, in particular owing to geopolitical aspects and trade divergences, which have affected on the manufacturing sector and exports, which are two imperative drivers of economic development in the eurozone. Apparently, the central bank has been a major player mainly from the autonomous debt crisis of 2011.
On a similar note, recently, Guindos stated that ECB is ready to take actions if euro-area financial system deteriorates. The outlook for the euro-area economy has got worse and lawmakers are prepared to provide extra monetary stimulus if required, Guindos said. The remarks marked yet another obvious message from the ECB in this week despite low inflation and perils to economic growth. On the contrary, Draghi stated that there is a chance that “extra stimulus would be needed,” counting interest rate curbs and bond purchases. “We hope that inflation will decelerate in the coming few months,” Guindos said.
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