ECB to pave way for more stimulus as recession fears grow

  • 10/29/2020
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FRANKFURT (Reuters) - The European Central Bank is expected to resist pressure to unveil fresh stimulus measures on Thursday but it will likely pave the way for action in December as fresh restrictions aimed at containing the coronavirus pandemic fuel fears over a new recession.Having already lined up unprecedented firepower to prop up the 19-member currency bloc’s economy, the ECB is in no hurry to act, as its ongoing bond buying could keep markets calm well into next year. Policymakers also appear keen to push governments to take the lead. But economic gloom is quickly spreading as coronavirus infections surge again, and the ECB is facing calls to signal even greater and longer-term support for an economy that has already suffered an unprecedented recession this year. That puts the onus on ECB President Christine Lagarde to signal the ECB’s commitment to keeping financing conditions super easy without raising market expectations so much that even sizable support in December would be seen as a disappointment. “Lagarde needs to walk a fine line with openness to do more, without pre-committing,” Danske Bank economist Piet Haines Christiansen said. “I think that risks are skewed to markets being slightly disappointed (on Thursday) rather than dovishly surprised.” The ECB announces its policy decision at 1245 GMT, followed by Lagarde’s press conference at 1330 GMT.

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