Yesterday, it was an eventful day, with one of the main events being the ECB decision. Although there was no new policy action and no new information in the meeting statement, President Draghi noted that officials will consider whether they need to mitigate the possible side effects of negative interest rates. The other big event was the EU summit on Brexit, which concluded overnight with EU leaders granting the UK another extension, up until October 31st.
ECB Could Mitigate Negative-rate Side Effects if Needed
Yesterday, we had a very busy day and one of the main events was the ECB policy decision. The European Central Bank decided to keep all three of its interest rates unchanged as was widely anticipated, while the statement accompanying the decision contained no new information. Officials simply reiterated that interest rates are likely to remain at their present levels “at least through the end of 2019”, and that they will continue reinvesting, in full, the principal payments from maturing securities purchased under QE past the time when interest rates will rise and in any case for as long as necessary.
Thus, investors turned quickly their attention to President Draghi’s press conference. In his introductory statement, the ECB Chief reiterated that the risks to the euro area outlook “remain tilted to the downside”, while...
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