Mario Draghi delivers his final "whatever it takes" with a big package of monetary stimulus.

The final showdown has started with a big bang. The ECB just announced a big policy package to revive the Eurozone economy and to bring inflation back to target. Here is what the ECB will do:

  • Deposit rate cut by 10 basis point to -0.5%.
  • A tiering system will be introduced.
  • Forward guidance on rates is no longer calendar based but open-ended and state-dependent.
  • QE will be restarted with 20bn euro per month, starting 1 November. There is no end date added to QE.
  • The TLTROs will be repriced and include an incentive for banks to increase lending. Along the lines of the first two generations of TLTROs, banks which exceed the benchmark ECB loans will be charged at the deposit rate.

This is  Mario Draghi’s final “whatever it takes”. Depsite all market excitement now, the question remains whether this will be enough to get growth and inflation back on track as the real elephant in the room is fiscal policy. It is clear that without fiscal stimulus, Draghi’s final stunt will not necessarily lead to a happy end.

At 2.30pm CET, ECB president Mario Draghi will elaborate on the decisions and might add some details. He might also add some flavour on the discussion and how he convinced the hawks. Get out the popcorn and cold drinks and stay tuned.

 

Read the original article: ECB: The big bang

Content disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more here: https://think.ing.com/content-disclaimer/

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD extends its decline amid upbeat US consumer confidence

EUR/USD is extending its falls toward 1.1050 after US Consumer Sentiment beat expectations with 92 points. Earlier, retail sales met expectations. 

EUR/USD News

GBP/USD rises above 1.24 as Brexit uncertainty prevails

GBP/USD hits a 6-week high above 1.24. The DUP dismissed reports that it would accept special treatment for the province as a solution to the backstop. The EU is ready to grant a Brexit extension as Johnson faces growing criticism.

GBP/USD News

USD/JPY: holding in higher ground ahead of US Retail Sales

Risk appetite dominates the financial world, weighing on safe-haven assets. US Retail Sales and the preliminary Michigan Consumer Sentiment Index up next. USD/JPY bullish case prevails, 107.45 critical Fibonacci support.

USD/JPY News

The good, the bad and the extremely ugly crypto

XRP is in a borderline situation and with little room for doubt. Bitcoin demonstrates its power and positions itself as the emerging leader. Ethereum is in an intermediate situation, far from risk but also from opportunity.

Read more

Gold remains on track to end week below $1,500

The troy ounce of the precious metal rose above $1,500 but failed to preserve its strength as the upbeat market sentiment made it difficult for the safe-haven gold to find demand. 

Gold News

Forex Majors

Cryptocurrencies

Signatures