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Morning Market Scoop 25 January 2019

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Barry Dumas
Moring-market-scoop

Morning Market Scoop 25 January 2019

In our morning market scoop:

  • European Central Bank Policy Decision

ecb-1

“Rates and More Rates”

What’s the scoop? ECB Interest Rate Decision

The European Central Bank (ECB) released its Interest Rate Decision yesterday followed by a press conference by ECB President Mario Draghi.

  • six members of the European Central Bank (ECB)’s Executive Board along with the 16 governors of the euro area central banks vote on where to set the rate.

The ECB kept its rates unchanged with its main refinancing rate at 0.00%, the Marginal lending rate at 0.25% with its deposit facility rate at -0.40%.

The big picture – The European Central Bank is keeping its policies unchanged for the first part of 2019 as the Eurozone growth outlook is of concern. The slowdown in economic growth in the Eurozone is set to drag on due to increased political uncertainty around international trade.

  • Earlier this week, the International Monetary Fund (IMF) cut its global growth forecast, blaming softening demand across Europe. Germany and Italy saw the biggest revisions after stricter emissions tests slashed car production in the region’s largest economy and a budget spat between Rome and Brussels boosted sovereign borrowing costs. – Bloomberg

ECB President Mario Draghi stated in his press conference that the Eurozone is facing increased challenges moving forward. The ECB will continue to reinvest proceeds from maturing bonds for an extended period. Draghi said that the topic did come up for a new round of long-term funding for banks, but no decision was made on the matter.

  • If the ECB investigates this option, it might assist banks to meet regulatory standards and support their lending to businesses and households.

What does all this mean for me?

  • The Eurozone will become more topical in 2019 as the global economic slowdown intensifies and we still have to get a resolve for
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