ECB restarts QEThe European Central Bank approved a fresh stimulus package as expected yesterday.
The ECB cut its deposit rate to a record low -0.5 percent from -0.4 percent and will restart bond purchases of
20 billion euros a month from November, it said.
With inflation falling, Germany skirting a recession and a global trade war sapping domestic confidence, the ECB had all but promised more support to the economy and the only question was how extensive stimulus would be.
"The Governing Council expects bond purchases
to run for as long as necessary, to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates," the ECB said.
The ECB also eased the terms of its long term loans to banks and introduced a tiered deposit rate to help banks.
Economists expected a 10 basis point deposit rate cut, a tiered deposit rate to support banks, bond buys of 30 billion euros a month from October and a fresh promise to keep rates low for longer.
Meanwhile, there is almost a 60 percent chance that the German economy could fall into recession, according to a monthly index gauging the health of Europe's largest economy published by the Macroeconomic Policy Institute.
The forward-looking index put the risk of recession at 59.4 percent, up from 43 percent in August. This is its highest recession risk reading since the winter months of 2012/2013.
Source: Reuters
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