European Central Bank to end crisis-era stimulus programme in December

17 June, 2018, 11:42 | Author: Natasha Holloway
  • ECB calls halt to quantitative easing, despite 'soft' euro

Elsewhere, the People's Bank of China (PBOC) left borrowing costs for interbank loans unchanged on Thursday, a surprising decision that shrugged off the Fed's rate increase.

The ECB said on Thursday it would end its hallmark bond purchase scheme by the close of the year but signalled that any interest rate hike is still distant.

Markets are on the lookout for clues from Bank of Japan governor Haruhiko Kuroda's post-meeting briefing at 6.30am GMT on how long the central bank could hold off on whittling down stimulus given stubbornly weak inflation.

The central bank will debate whether to end its huge asset purchases by year-end, which was a crisis-era stimulus credited with pulling the euro zone economy out of recession.

Meanwhile, the European Central Bank expects that the benchmark deposit interest rates for the euro area will remain at present levels at least through the summer of 2019.

The ECB said it would taper its bond-buying programme down to 15 billion euros a month in the fourth quarter from 30 billion euros a month now in a move that broadly met market expectations.

The euro slipped a little against the dollar on the news, falling around 0.35% on the day, to €1.175.

Automakers were trading mixed after industry data showed Europe passenger vehicle sales grew only 0.8 percent year-on-year in May, following a 9.6 percent rise in April.

West Texas Intermediate crude oil futures were down 0.2 per cent at US$66.76 per barrel; Brent was down 0.6 per cent at US$75.49.

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Benefiting from the ECB's decision were stock markets on both sides of the Atlantic.

Other analysts said they thought that now the ECB's closely-watched meeting was out of the way and the picture for interest rates clearer, currency markets could embrace more risk. "It doesn't seem like we're at the stage where the hawks are on top of things". More evidence arrived that the USA economy is improving, meanwhile, which helped send the S&P 500 to its fourth gain in the last five days.

Technology stocks were the biggest advancers, with Facebook and Alphabet leading the pack. The yield on 10-year Treasuries dipped 3 basis points to 2.93 per cent.

The ECB also downgraded its eurozone growth forecast for this year to 2.1% from 2.4% previously, while upgrading its inflation forecast to 1.7% from 1.4%, largely as a result of rising oil prices.

China will impose an additional 25 percent tariff on 659 USA goods worth $50 billion, the official Xinhua news agency reported on Saturday, citing the Tariff Commission of the State Council.

According to reports, U.S. President Trump has made up his mind to impose "pretty significant" tariffs on Chinese goods, an administration said on Thursday, as Beijing warned that it was ready to respond if Washington chose to ratchet up trade tensions.

'We don't think retailers are out of the woods just yet.

CBOT July corn fell to its lowest since mid-January and front-month soybeans dipped to a 9-1/2 month low.

And an acrimonious end to Saturday's Group of Seven summit heightened the risk of a tit-for-tat trade war between European Union nations and U.S. President Donald Trump.



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