If the Fed cuts rates, is the ECB prepared to join it? The bank signaled that could be the case. Tom Fairless and Brian Blackstone report for The Wall Street Journal:
The European Central Bank left interest rates unchanged but several officials raised the prospect of rate reductions, amplifying a global trend toward easier monetary policy to combat weaker growth.
In a nod to the recent erosion in the global economic outlook, the ECB extended the time frame before any rate increase to the middle of 2020 from the end of this year.
In a statement on Thursday, the ECB said it would hold its key policy rate at the current level of minus 0.4% at least through to the middle of next year and continue to reinvest maturing bonds in its €2.6 trillion ($2.9 trillion) debt portfolio. It announced generous terms for fresh long-term loans to banks starting in September.
The policy statement didn’t allude to rate reductions, but in a question-and-answer session Mr. Draghi said “several members” raised the possibility of rate cuts while others mentioned restarting asset purchases.
Asked whether the ECB’s next move on interest rates was more likely to be a hike than a cut, Mr. Draghi said “No.”
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