European Central Bank (ECB) President Mario Draghi is expected to go big in a final stimulus push, overriding protests from among his ranks that tools such as bond purchases are not yet needed.
More than 80 percent of economists surveyed by Bloomberg predict officials would announce more quantitative easing next week.
They see the ECB’s deposit rate being reduced by 10 basis points to a record-low minus-0.5 percent this month and expect a second cut of the same magnitude in December.
Draghi, who leaves his post next month and is set to be replaced by outgoing IMF managing director Christine Lagarde, argued in July before the ECB’s summer break that the “outlook is getting worse and worse.”
By easing, the ECB would join a wave of policy loosening by central banks as the global economy cools because of protectionism and geopolitical tensions.
The US Federal Reserve might follow a week later with its second rate cut of the year, and the Swiss National Bank is seen as likely to reduce its key rate further below zero if the ECB acts.
ECB officials — including Germany’s Jens Weidmann, Dutchman Klaas Knot and Estonia’s Madis Muller — are among those who have recently expressed skepticism over the need for bond buying, saying it would be disproportionate to economic conditions.
While some economists — including those at Morgan Stanley — have scaled back their expectations in response, the median estimate among survey respondents is for a resumption of purchases at a pace of 30 billion euros (US$33 billion) a month for one year.
According to Bloomberg Economics, a program of such magnitude would require tweaks to existing guidelines that limit how much of a nation’s debt can be bought.
Economists in the survey also see the ECB introducing mitigating measures to contain side effects from negative rates.
“A risk exists that the ECB compromises on a less-bold package than our expectations,” Danske Bank analyst Piet Christiansen said. “However, the ECB’s credibility is on the line.”
Any expansion of unconventional measures — whether through interest rates or bond purchases — would mark a profound shift from late last year when officials were preparing to wind down monetary support.
Since then, growth momentum has slowed significantly, and economists expect the ECB to revise down its outlook for growth and inflation yet again.
Trade is still dominating the list of concerns, followed closely by a disorderly departure of the UK from the EU.
Economists as well as policymakers have argued that even a comprehensive easing package would do little to help the region in the event of a deeper economic crisis if it is not accompanied by help from other actors.
Lagarde, who is on track to join the ECB in November, said earlier this week that countries with room for spending should use it, and called for a European-level fiscal capacity.
“The ECB’s main priority will be to encourage euro-area governments to pursue fiscal stimulus,” Global Alliance Partners economic adviser Alastair Winter said. “Lagarde was parachuted in to the ECB to build a consensus for a cocktail of loose monetary and fiscal policies.”
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day