The European Central Bank (ECB) and the Bank of England are expected to announce stimulus measures in the coming days, after the Federal Reserve surprised global markets with a large rate cut.
Tuesday to deal with the ongoing outbreak of the coronavirus and its economic impact. The virus that started in China in late December has spread worldwide, denting exports and reducing air travel.
Some market watchers are expecting a rate cut of 10 basis points in the euro zone and changes to bank lending. However, ECB President Christine Lagarde could also announce additional measures. The ECB's deposit rate — which is the interest that the central bank provides to financial institutions that deposit cash at the ECB — stands at -0.5%. The negative rate is meant to spur banks to loan money rather than park it at the central bank. The ECB is also providing other forms of stimulus to the euro zone via an open-ended bond-purchase program andTo be blunt, at the current juncture a vaccine would definitely help more than another rate cut.
"The late statement by ECB President Christine Lagarde provided the strongest signal to date that the central bank is about to shift its stance and ease monetary policy further as a response to the virus outbreak," Ducrozet, from Pictet Wealth Management, also said.
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