This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/live/2019/jul/25/investors-ecb-european-central-bank-economic-stimulus-brexit-interest-rates-euro-sterling-pound-dollar-business-live
The article has changed 8 times. There is an RSS feed of changes available.
| Version 3 | Version 4 |
|---|---|
| ECB holds interest rates steady but signals future stimulus – business live | ECB holds interest rates steady but signals future stimulus – business live |
| (32 minutes later) | |
| The euro is just a whisker shy of two-year lows against the US dollar. | |
| It traded as low as $1.1107 in the aftermath of the announcement. If it breaks below $1.1106 it will be the lowest level since May 2017 by my reckoning – tantalisingly close (if almost entirely of symbolic value). | |
| The pound is now up by 0.3% against the euro for the day. It’s all ECB-driven: against the US dollar sterling is still flat. | |
| An important update: | |
| 'ZERO' reaction in #bitcoin on the #ECB statement. #notgold pic.twitter.com/COy1UwCBbQ | |
| Thoughts at the press conference (due in about 20 minutes) will turn to what mix of stimulus measures Draghi et al. will consider necessary at the September meeting. | |
| “The ECB is loading its bazooka, but with what?” asks Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics. | |
| As we have persistently noted, the ECB never pre-commits. But this is as close at it gets. | |
| Further easing is on the way. But what kind? We are fairly certain that deposit rate cuts are coming, but today’s initial statement points towards a combination of rate cuts and QE. We are sure that Mr. Draghi will be quizzed intensely about this balance, and options, in the press conference. | |
| Demand for UK government debt has increased, with the yield on the 10-year gilt falling to its lowest level since September 2016. | |
| The yield on the benchmark bond fell to a low of 0.65%. Yields move inversely to prices. | |
| Some reaction from economists is now coming through. | |
| Ana Andrade, analyst at the Economist intelligence Unit, said it has “laid the ground for a cut, but will wait for September to implement further stimulus – which will then be backed by hard data and fresh macroeconomic projections.” | |
| Weak economic momentum and rising deflation risk, as measured by the substantial de-anchoring of inflation expectations over the past few months, call for further action. | |
| The press release reveals a much more dovish stance than expected. Up until now the re-start of QE remained a vague possibility. But the ECB’s decision to task the relevant Eurosystem Committees with examining options for further stimulus, and the formal reinforcement of the ECB’s commitment to the symmetry in its inflation aim leave no room for doubt about the ECB’s willingness to act. Whether by re-starting QE or by substantially cutting the deposit rate. | |
| There could be more quantitative easing on the way, with ECB economists in Frankfurt tasked with looking at options to “reinforce” its interest rates actions. | There could be more quantitative easing on the way, with ECB economists in Frankfurt tasked with looking at options to “reinforce” its interest rates actions. |
| The ECB’s statement said: | The ECB’s statement said: |
| The Governing Council has tasked the relevant Eurosystem Committees with examining options, including ways to reinforce its forward guidance on policy rates, mitigating measures, such as the design of a tiered system for reserve remuneration, and options for the size and composition of potential new net asset purchases. | The Governing Council has tasked the relevant Eurosystem Committees with examining options, including ways to reinforce its forward guidance on policy rates, mitigating measures, such as the design of a tiered system for reserve remuneration, and options for the size and composition of potential new net asset purchases. |
| The euro briefly bounced higher, but has now hit another two-month low of $1.1118 against the US dollar. | The euro briefly bounced higher, but has now hit another two-month low of $1.1118 against the US dollar. |
| Read the ECB’s full statement here. | Read the ECB’s full statement here. |
| There is some strong guidance on the future path of interest rates, however. | There is some strong guidance on the future path of interest rates, however. |
| Policy will remain “highly accommodative” for “a prolonged period of time”. | Policy will remain “highly accommodative” for “a prolonged period of time”. |
| The Governing Council also underlined the need for a highly accommodative stance of monetary policy for a prolonged period of time, as inflation rates, both realised and projected, have been persistently below levels that are in line with its aim. Accordingly, if the medium-term inflation outlook continues to fall short of its aim, the Governing Council is determined to act, in line with its commitment to symmetry in the inflation aim. It therefore stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner. | The Governing Council also underlined the need for a highly accommodative stance of monetary policy for a prolonged period of time, as inflation rates, both realised and projected, have been persistently below levels that are in line with its aim. Accordingly, if the medium-term inflation outlook continues to fall short of its aim, the Governing Council is determined to act, in line with its commitment to symmetry in the inflation aim. It therefore stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner. |
| The ECB’s governing council has voted to leave interest rates unchanged. | The ECB’s governing council has voted to leave interest rates unchanged. |
| From its statement: | From its statement: |
| At today’s meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present or lower levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to its aim over the medium term. | At today’s meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present or lower levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to its aim over the medium term. |
| A reminder: the 12:45pm BST announcement will be followed by the press conference led by ECB president Mario Draghi at 1:30pm BST. | A reminder: the 12:45pm BST announcement will be followed by the press conference led by ECB president Mario Draghi at 1:30pm BST. |
| You will be able to watch the ECB’s webcast of the press conference at this link. | You will be able to watch the ECB’s webcast of the press conference at this link. |
| So a quick round-up as we prepare for the announcement: the euro is now flat for the day against the US dollar. | So a quick round-up as we prepare for the announcement: the euro is now flat for the day against the US dollar. |
| Sterling is up by about 0.14% against the euro and the dollar. | Sterling is up by about 0.14% against the euro and the dollar. |
| Borrowing costs have been driven lower in expectation of more stimulus. The yield on the German 10-year hit a new all-time low of -0.443% this morning, as investor demand for bonds increased in the expectation of looser monetary policy. Yields move inversely to prices. | Borrowing costs have been driven lower in expectation of more stimulus. The yield on the German 10-year hit a new all-time low of -0.443% this morning, as investor demand for bonds increased in the expectation of looser monetary policy. Yields move inversely to prices. |
| With barely 10 minutes left until the ECB’s announcement, perhaps they will take a leaf from Turkey’s book? | With barely 10 minutes left until the ECB’s announcement, perhaps they will take a leaf from Turkey’s book? |
| Its central bank has slashed the key interest deeply, by 4.25 percentage points, in a first monetary policy meeting under its new governor. The interest rate was cut on Thursday to 19.75% from 24%, the Associated Press reports. | Its central bank has slashed the key interest deeply, by 4.25 percentage points, in a first monetary policy meeting under its new governor. The interest rate was cut on Thursday to 19.75% from 24%, the Associated Press reports. |
| President Recep Tayyip Erdogan dismissed the previous governor, Murat Cetinkaya, on July 6 over disagreements on interest rate cuts and reiterated his belief that interest rates are “the mother of all evil.” | President Recep Tayyip Erdogan dismissed the previous governor, Murat Cetinkaya, on July 6 over disagreements on interest rate cuts and reiterated his belief that interest rates are “the mother of all evil.” |
| Cetinkaya was replaced by Murat Uysal, the deputy governor. | Cetinkaya was replaced by Murat Uysal, the deputy governor. |
| The largest carmaker in Britain, Jaguar Land Rover, lost £395m in the second quarter of the year after a sales slump. | The largest carmaker in Britain, Jaguar Land Rover, lost £395m in the second quarter of the year after a sales slump. |
| Global sales fell by 11.6% year-on-year in the three months to 30 June, JLR said. Revenues for the quarter were £5.1bn, a 2.8% year-on-year decline. | Global sales fell by 11.6% year-on-year in the three months to 30 June, JLR said. Revenues for the quarter were £5.1bn, a 2.8% year-on-year decline. |
| JLR, which is owned by India’s Tata Motors, blamed “weaker market conditions” as well as the Brexit-related shutdown of factories in April. Brexit also delayed its emissions certifications, it added. | JLR, which is owned by India’s Tata Motors, blamed “weaker market conditions” as well as the Brexit-related shutdown of factories in April. Brexit also delayed its emissions certifications, it added. |
| Ralf Speth, Jaguar Land Rover chief executive, said: | Ralf Speth, Jaguar Land Rover chief executive, said: |
| Jaguar Land Rover is in a period of major transformation. We are simplifying our business, delivering on our product strategy and adapting to the tough market environment. We will build on our strong foundations and increased operating efficiency to return to profit this fiscal year. | Jaguar Land Rover is in a period of major transformation. We are simplifying our business, delivering on our product strategy and adapting to the tough market environment. We will build on our strong foundations and increased operating efficiency to return to profit this fiscal year. |
| Jacob Rees-Mogg, newly appointed leader of the house of commons, has resigned from his role at a London-headquartered hedge fund, according to the London Evening Standard. | Jacob Rees-Mogg, newly appointed leader of the house of commons, has resigned from his role at a London-headquartered hedge fund, according to the London Evening Standard. |
| Rees-Mogg is a co-founder at Somerset Capital Management, and has earned hundreds of thousands of pounds as a partner at the firm. He was paid about £15,000 per month for 30 hours’ work every month for the past year, according to the latest register of members’ interests. | Rees-Mogg is a co-founder at Somerset Capital Management, and has earned hundreds of thousands of pounds as a partner at the firm. He was paid about £15,000 per month for 30 hours’ work every month for the past year, according to the latest register of members’ interests. |
| The firm last year gained notoriety after it set up an investment fund in Ireland and warned prospective clients about the financial dangers of a hard Brexit. | The firm last year gained notoriety after it set up an investment fund in Ireland and warned prospective clients about the financial dangers of a hard Brexit. |
| BREAKING: Jacob Rees-Mogg steps down from his role at Somerset Capital Management | BREAKING: Jacob Rees-Mogg steps down from his role at Somerset Capital Management |
| Boris Johnson has promised to make the UK the “greatest place on earth” in his first statement to the house of commons. Quite the echo of another blond world leader (and no mention of extraterrestrial ambitions from earlier in the week). | Boris Johnson has promised to make the UK the “greatest place on earth” in his first statement to the house of commons. Quite the echo of another blond world leader (and no mention of extraterrestrial ambitions from earlier in the week). |
| Michael Gove is in charge of no-deal planning – what the Brexit department will be doing is unclear. | Michael Gove is in charge of no-deal planning – what the Brexit department will be doing is unclear. |
| A lot of spending plans: more money for the National Health Service; 20,000 new police officers; more funding for schools. | A lot of spending plans: more money for the National Health Service; 20,000 new police officers; more funding for schools. |
| And tax cuts as well, although sparse on the detail so far. | And tax cuts as well, although sparse on the detail so far. |
| On migration, he points to an Australian points-based system, but says EU nationals will have a right to remain in the UK. | On migration, he points to an Australian points-based system, but says EU nationals will have a right to remain in the UK. |
| You can follow in a lot more detail with the Guardian’s Andrew Sparrow on the politics live blog: | You can follow in a lot more detail with the Guardian’s Andrew Sparrow on the politics live blog: |
| Boris Johnson chairs first cabinet as critics say party now 'fully taken over by hard right' – live news | Boris Johnson chairs first cabinet as critics say party now 'fully taken over by hard right' – live news |
| With the ECB and the US Federal Reserve both looking to cut interest rates, what is the Bank of England up to? Not much, for the moment, appears to be the answer. | With the ECB and the US Federal Reserve both looking to cut interest rates, what is the Bank of England up to? Not much, for the moment, appears to be the answer. |
| The Bank’s rate-setting monetary policy committee meets next week (ahead of Thursday’s announcement) but will stick to its “solitary policy path”, according to Martin Beck at Oxford Economics, a consultancy. | The Bank’s rate-setting monetary policy committee meets next week (ahead of Thursday’s announcement) but will stick to its “solitary policy path”, according to Martin Beck at Oxford Economics, a consultancy. |
| A 9-0 vote to hold rates steady is on the cards he says – with no change to its guidance that it will raise interest rates where other central bankers are reacting to a slowing global economy. | A 9-0 vote to hold rates steady is on the cards he says – with no change to its guidance that it will raise interest rates where other central bankers are reacting to a slowing global economy. |
| A new PM, a likely shift in fiscal policy and continued Brexit uncertainty give the MPC good cause to continue a wait-and-see approach and leave the possibility of tighter policy until well into 2020. | A new PM, a likely shift in fiscal policy and continued Brexit uncertainty give the MPC good cause to continue a wait-and-see approach and leave the possibility of tighter policy until well into 2020. |
| Amid further signs of dovishness from the US Fed and the European Central Bank, the monetary policy committee is likely to leave the BoE the odd one out among major central banks | Amid further signs of dovishness from the US Fed and the European Central Bank, the monetary policy committee is likely to leave the BoE the odd one out among major central banks |