MADRID | By Jaime Santisteban | ECB’s Mario Draghi’s Thursday speech is still creating buzz in Madrid’s financial circles: markets reacted very positively to the never-ending promise. Also, Bank of Spain’s chairman José María Linde alerted entities to keep strengthening their balance sheets, and explained that NPL rate slowdown will be moderate until recovery settles in.
MADRID | By Francisco López | While Mr. Draghi simply says that the ECB “is closely following the evolution of the exchange rate due to its impact on the price stability,” other international bodies such as the IMF, the OECD, the European Commission and most of the Eurozone’s countries (with the exception of Germany and its allies) demand the banking authority to take immediate action.
LONDON | By Barclays analysts | We expect the ECB to stay on hold at next week’s Governing Council meeting, though we think the likelihood of further easing remains very elevated. Should the ECB decide to act, we remain of the view that cutting rates would be the preferred option. Furthermore, we believe its implementation is not straightforward, making it unlikely in the short term
MADRID | By The Corner | For the first time a Spanish bank top executive has openly criticized the impact of the European Central Bank’s inaction on EZ credit lending. Spanish 2nd bank BBVA’s Jose Manuel Gonzalez-Paramo, also a former ECB board member, explained how banks are waiting to see which unconventional measures will Mr Draghi undertake, which is “fundamental for credit,” he said to Reuters on Monday. Some entities are also holding back on new credit plans and selling sovereign debt before the health checks due around October.
MADRID | By Ana Fuentes | How much is enough? Mario Draghi announced that the ECB’s Governing Council is unanimously committed to “using both unconventional and conventional instruments to deal effectively with the risks of a too-prolonged period of low inflation.” His most explicit comments came as EZ inflation slowed to 0.5 percent last month, the weakest pace in more than four years, whereas the central bank’s target inflation is at 2%. Excess liquidity in the 18-nation currency bloc financial system has dropped to 92.9 billion euros ($128 billion), the lowest level since December 2011. When will Mr Draghi feel real risks?
MADRID | By Ana Fuentes | ECB policy makers are increasingly open about an eventual QE. Executive Board Member Benoît Coeuré was recently interviewed by French newspaper Le Monde. He weighed in austerity measures taken, and how could the ECB influence the level of the euro. As the central bank seems to be actually leaning towards unconventional measures, bonds and equity markets have already anticipated any announcements by Mario Draghi. But some fear what would happen if it was only lip service. What happened with the “whatever it takes” to preserve the eurozone’s integrity?
MADRID | By The Corner | When Autumn comes, so will QE. At least that’s what economists at Citigroup are predicting. “We believe that the chances of unsterilized large-scale asset purchases (LSAPs) of public and private assets being launched this year have (…) increased to more than 50:50,” they said in a note on Tuesday. How much of a stimulus shot are we talking about? To have any effect it should be of at least 1,000 billion euros ($1,381 billion), they note, which would lift the inflation rate toward the ECB’s “below, but close to 2% target”. It could always be a decaffeinated step as some market makers are warning, but the truth is many on both sides of the Atlantic are hoping for Mr Draghi to make a move.
SAO PAULO | By Marcus Nunes via Historinhas | “The IMF has been very generous in its suggestions on what we should do,” said Mr Draghi in a sarcastic tone on Thursday.
MADRID | By The Corner team | Neither the recovery of euro zone leading PMI services index, nor the stability of low inflation levels or financial conditions favouring all the region, including peripheral countries, would justify new significant monetary stimulus from the European Central Bank in today’s meeting. Furthermore, there is not a consensus even within the ECB itself. “Just the continuing appreciation of the euro could make the ECB to take action”, Renta 4’s analysts in Madrid said earlier this morning. As regards central bank’s expectations on inflation up to 2016, Draghi will probably confirm they will continue to be firmly anchored in the medium term, even though levels in the short term are very low.
SAO PAULO | By Marcus Nunes | Investors betting on fresh easing measures from the European Central Bank (ECB) were left empty-handed Thursday, propelling the euro to a one-week high against the dollar.