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When will interest rates rise again? This is the central question to which the head of the ECB, Mario Draghi, will probably not answer at this meeting on interest rates.
05:48, July 26, 2018
A growing trade dispute with the United States and an uncertain prospect on interest rates Thursday after the Council meeting in Frankfurt will further highlight concerns about a escalation tariff dispute. Some economists also think that it is possible for the Italian to take more specific interest rate outlooks.
However, most experts believe that it is more likely that the ECB remains flexible and thus avoids more precise wording. As the ECB leaders set the course in June and announced the end of its multibillion dollar bond purchases at the end of the year, major decisions are unlikely this time around. Key interest rates, which are already at the 0.0% lows since March 2016, are unlikely to shake the monetary authorities
Risk factors
The last meeting of the ECB before the holidays Summer should be overshadowed by the trade dispute with the United States. If this spiral resulted in a spiral of tariffs and counter-rights in perpetual evolution, the European economy could weaken appreciably. For Draghi, this would come at an inconvenient time, as Euro-observers are moving to a less favorable monetary policy. "The warning of escalating trade conflict could therefore be a bit stronger, not to mention car rates," says chief economist Holger Schmieding of Berenberg Bank.
Special tariffs on cars would particularly affect Germany. The President of the European Commission, Jean-Claude Juncker, will try to persuade US President Donald Trump to divert
When interest rates will rise
Mr. Draghi will also face some critical questions about the interest rate outlook. Swiss bank Bantleon. It has recently been intrigued that the European Central Bank (ECB) later changed the translations into certain languages in June. Euro-observers had announced that they would maintain their key interest rates at the current level until at least "beyond the summer" of 2019. That's what what does the German version of the outlook say? The reference at the end of the summer of 2019 had been removed by the ECB
The minutes of the June interest rate meeting do not clearly state whether the members of the Council had long struggled exact wording. "Due to the expected market importance, this seems careless," says Stefan Kipar, analyst at BayernLB. According to internal sources, central bankers have very different views as to whether the current version would raise rates as early as July 2019 or later in September or October. Economists at Danske Bank believe that the ECB will not be more specific about its outlook until next year.
Investors also want to hear from Draghi how the central bank will reinvest its income from bond purchases in the future. According to insiders, it is planned to reinvest the funds from the maturity papers in securities in the longer term in the future. "Such a reinvestment approach would help ensure that long-term returns remain firmly anchored at a low level," says Christian Dz Bank's interest rate expert Christian Reicherter. However, many economists doubt that the ECB will look more closely this week.
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