sunny.png
Saturday December 4th, 2021 5:24PM

European Central Bank to step up pace of stimulus program

By The Associated Press
Related Articles
  Contact Editor

Frankfurt, Germany (AP) — The European Central Bank said Thursday it will step up its bond-buying stimulus program to keep the region's lagging economic recovery from being derailed by a premature rise in borrowing costs.

The central bank for the 19 countries that use the euro said that over the next quarter the purchases would be conducted “at a significantly higher pace than during the first months of the year."

Yields on long-term government bonds have risen by about 0.3% since the start of the year in the eurozone. That is not much, and rates remain low. But the ECB wants to avoid any premature tightening of credit while businesses are still struggling with coronavirus lockdowns.

ECB President Christine Lagarde told a news conference that the rise in market borrowing rates, “if left unchecked, could translate into a premature tightening of financial conditions for all sectors of the economy. This is undesirable.”

The bond purchases have the effect of pushing down bond yields, which are used as benchmarks for borrowing across the region. So a faster pace of bond purchases would in theory help keep credit cheap for companies who need to invest or borrow to get through the pandemic. Businesses are reeling from the economic impact of government restrictions on public life, which are meant avoid new coronavirus infections.

The rise in longer-term borrowing rates is regarded as a spillover from the U.S., where the economic recovery is expected to be faster. The eurozone is still in a double-dip recession and is seen by economists as not ready for rising rates. Output shrank 0.6% in the last three months of 2020 and probably declined again in the first quarter of this year, say economists.

The ECB bought 59.9 billion euros in February and 53 billion euros in January. The purchases ran as high as 120 billion in June 2020. The purchases will come out of the total of 1.85 trillion-euro set aside for the program; almost 1 trillion euros of that has yet to be used. The ECB says it will continue the purchases until at least the end of March 2022, and in any case until it judges that the pandemic crisis phase is over.

The central bank's move underlines how the eurozone is lagging behind other major economies in recovery. China was the only major economy to grow last year, and the U.S. is expected to reach pre-pandemic levels of output by the middle of this year.

By contrast, the eurozone economy is not expected to recover until mid-2022, held back by a slow vaccine rollout and lower levels of government relief spending compared with the U.S. The U.S. Congress on Wednesday approved a wide-ranging $1.9 trillion relief package pushed by new President Joe Biden, coming on top of previous relief legislation under predecessor Donald Trump.

The ECB's move caused a immediate reaction in financial markets, with bond yields sliding and stock markets rising in Europe.

The ECB is the monetary authority for the 19 of 27 European Union member countries that have joined the common currency. It plays a role analogous to that of the U.S. Federal Reserve, the Bank of Japan or the Bank of England in the U.K. It can steer market interest rates in ways best for the economy, using short-term benchmarks such as its weekly lending to bank or intervening in the bond market to affect longer-term rates.

  • Associated Categories: Associated Press (AP), AP National News, AP Online National News, AP World News, AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Financial Services
© Copyright 2021 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
European Central Bank to step up pace of stimulus program
The European Central Bank says it will step up its bond-buying stimulus in the coming months
7:51AM ( 8 minutes ago )
IOC and China make vaccine deal for Tokyo, Beijing Olympians
The International Olympic Committee and China are teaming up to offer vaccines to athletes and teams preparing for the upcoming games in both Tokyo and Beijing
7:19AM ( 40 minutes ago )
Gig economy shifts: Spain delivery riders are now employees
The Spanish government has announced legislation that classifies food delivery riders as employees of the digital platforms they work for, not self-employed
7:07AM ( 52 minutes ago )
Associated Press (AP)
The Latest: Israel vaccinates vast majority of its soldiers
The Israeli military says it has vaccinated the vast majority of its soldiers, allowing the military to resume many of its normal operations
6:00AM ( 2 hours ago )
Greece outlines new coronavirus relief package
Greece’s prime minister has outlined a new 2.5 billion-euro ($3 billion) package of relief measures for businesses and workers affected by the coronavirus pandemic and related lockdowns
5:32AM ( 2 hours ago )
EU figures show major vaccine exports despite home shortage
European Union figures show that the 27-nation bloc has allowed some 34 million doses of COVID-19 vaccine exports over the past weeks despite shortages at home as it continues to struggle to get its vaccine drive up to speed
5:22AM ( 2 hours ago )
AP Business
Asian shares advance as yields, inflation fears moderate
Stocks have climbed in Asia after a key measure of inflation in the U.S. came in lower than expected, easing worries that price pressures could push interest rates higher
1:39AM ( 6 hours ago )
New Zealand pushes to end global tariffs on virus supplies
New Zealand is pushing for nations around the world to end tariffs on face masks, syringes and other supplies needed to battle the coronavirus pandemic
12:51AM ( 7 hours ago )
Congress OKs $1.9T virus relief bill in win for Biden, Dems
Congress has sent President Joe Biden the landmark $1.9 trillion COVID-19 relief bill
12:35AM ( 7 hours ago )
AP Business - Economy
Senate confirms Ohio Rep. Fudge as housing secretary
The Senate has confirmed Marcia Fudge to head the Department of Housing and Urban Development
5:35PM ( 14 hours ago )
Stocks mostly climb, except tech, as inflation worries ease
Stocks closed mostly higher on Wall Street as a benign reading on inflation led to long-term interest rates easing lower in the bond market
5:12PM ( 14 hours ago )
Stability in bond market helps lift major US stock indexes
Major U.S. indexes are moving higher Wednesday as stability in the bond market translates into gains for stocks
3:45PM ( 16 hours ago )
AP Business - Financial Markets
Brazil hospitals buckle in absence of national virus plan
Brazil’s hospitals are faltering as a highly contagious coronavirus variant tears through the country
1:40AM ( 6 hours ago )
Japan's recovery from tsunami disaster, by the numbers
Numbers show how much progress has been made and what still remains 10 years after the triple disaster of an earthquake, tsunami and nuclear plant meltdown on Japan's northeastern coast
1:18AM ( 6 hours ago )
Japan marks 10th disaster anniversary while still recovering
Japan is marking the 10th anniversary of the earthquake, tsunami and nuclear disaster with many survivors’ lives are still on hold
12:48AM ( 7 hours ago )
AP Business - Industries
Greenpeace protests ECB's loans for carbon-heavy industries
Greenpeace activists have landed on the roof of a European Central Bank building to protest the financial institution’s loans policy, which they say favors heavily polluting industries
3:37AM ( 1 day ago )
Victims agree to extend temporary halt on Boy Scout lawsuits
The committee representing child sex abuse survivors in the Boy Scouts of America bankruptcy case has agreed to the extension of an injunction halting lawsuits against local Boy Scouts councils
6:37PM ( 1 day ago )
$40M gender equality fund by Gates, Scott picks finalists
A gender equality philanthropic initiative spearheaded by Melinda Gates’ investment company, with support from MacKenzie Scott, has announced 10 project finalists for $40 million in funding slated to be awarded this summer
7:03PM ( 2 days ago )
AP Business - Financial Services
IOC and China make vaccine deal for Tokyo, Beijing Olympians
The International Olympic Committee and China are teaming up to offer vaccines to athletes and teams preparing for the upcoming games in both Tokyo and Beijing
7:19AM ( 40 minutes ago )
Gig economy shifts: Spain delivery riders are now employees
The Spanish government has announced legislation that classifies food delivery riders as employees of the digital platforms they work for, not self-employed
7:07AM ( 52 minutes ago )
Prince William defends UK royal family against racism claims
Prince William has as defended the U_K_ royal family against accusations of racism made by his brother Prince Harry and his sister-in-law Meghan, saying the royals are “very much not a racist family.”
6:48AM ( 1 hour ago )
The Latest: Germany: Virus restrictions saved 100,000 lives
The head of Germany’s disease control agency says measures to prevent the spread of the coronavirus have saved more than 100,000 lives in the country since the start of the pandemic a year ago
6:38AM ( 1 hour ago )
Ethiopia's leader faces intense pressure to end Tigray war
Ethiopia’s government faces mounting pressure to withdraw troops from Tigray amid growing reports of war crimes in the embattled region that now faces a humanitarian crisis
6:38AM ( 1 hour ago )