Euro will rise this year as political risks shift toward the US, currency experts say

The euro could strengthen to $1.16 throughout 2020 thanks to an economic recovery in Europe, lower political risks, and no significant policy change from the European Central Bank (ECB), currency strategists at Nomura bank said Friday. The euro lost value against the dollar throughout 2019, trading lower on news about international trade, tepid economic data and perceived political risks. As a new year begins, strategists at Nomura believe that the euro will make up for some of last year’s losse


The euro could strengthen to $1.16 throughout 2020 thanks to an economic recovery in Europe, lower political risks, and no significant policy change from the European Central Bank (ECB), currency strategists at Nomura bank said Friday.
The euro lost value against the dollar throughout 2019, trading lower on news about international trade, tepid economic data and perceived political risks.
As a new year begins, strategists at Nomura believe that the euro will make up for some of last year’s losse
Euro will rise this year as political risks shift toward the US, currency experts say Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-10  Authors: silvia amaro
Keywords: news, cnbc, companies, political, nomura, risks, currency, economic, bank, shift, strategists, euro, rise, lower, experts, european, say, ecb


Euro will rise this year as political risks shift toward the US, currency experts say

Guests and journalists observe a facsimile of the twenty euros banknote of Europa series at the end of its unveiling ceremony during which ECB president Mario Draghi signed a facsimile, in the ECB headquarters, Frankfurt, Germany, 24 February 2015.

The euro could strengthen to $1.16 throughout 2020 thanks to an economic recovery in Europe, lower political risks, and no significant policy change from the European Central Bank (ECB), currency strategists at Nomura bank said Friday.

The euro, used in 19 European countries, was trading at $1.11 on Friday. The euro lost value against the dollar throughout 2019, trading lower on news about international trade, tepid economic data and perceived political risks. In September, the euro dropped to $1.09 as investors questioned the economic prospects of Germany, changes in the Italian government and whether the ECB would be announcing further monetary stimulus.

As a new year begins, strategists at Nomura believe that the euro will make up for some of last year’s losses. “We remain constructive on (the) euro into 2020, as a cyclical upturn should keep the single currency supported,” the bank said in a research note Friday.

Nomura said European data should pick, the ECB is not expected to alter its current policies, there is room for some positive reforms, capital outflows are falling and there are lower political risks.

“We expect EUR/USD to trade at current levels and approach 1.16 by end-2020, with risks to the upside if the U.S. Presidential election leads to a USD negative surprise,” strategists at Nomura also said.


Company: cnbc, Activity: cnbc, Date: 2020-01-10  Authors: silvia amaro
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European stocks slightly higher after dovish Fed indications; UK election and ECB in focus

European stocks traded cautiously higher Thursday morning after the U.S. Federal Reserve signaled that it did not plan to raise interest rates in 2020. The pan-European Stoxx 600 edged up 0.1% in early trade, with technology stocks adding 0.6% to lead gains as most sectors entered positive territory. The European Central Bank (ECB) will announce its latest monetary policy decision on Thursday afternoon, marking a debut for new President Christine Lagarde. Back in Europe, voters head to the polls


European stocks traded cautiously higher Thursday morning after the U.S. Federal Reserve signaled that it did not plan to raise interest rates in 2020.
The pan-European Stoxx 600 edged up 0.1% in early trade, with technology stocks adding 0.6% to lead gains as most sectors entered positive territory.
The European Central Bank (ECB) will announce its latest monetary policy decision on Thursday afternoon, marking a debut for new President Christine Lagarde.
Back in Europe, voters head to the polls
European stocks slightly higher after dovish Fed indications; UK election and ECB in focus Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-12  Authors: elliot smith
Keywords: news, cnbc, companies, election, fed, indications, tariffs, signaled, morning, rates, lagarde, higher, trade, european, president, stocks, slightly, ecb, policy, focus


European stocks slightly higher after dovish Fed indications; UK election and ECB in focus

European stocks traded cautiously higher Thursday morning after the U.S. Federal Reserve signaled that it did not plan to raise interest rates in 2020.

The pan-European Stoxx 600 edged up 0.1% in early trade, with technology stocks adding 0.6% to lead gains as most sectors entered positive territory.

The Fed held rates steady at its last policy meeting of 2019 on Wednesday following three rate cuts in the past five months, but signaled that rates would remain accommodative with no hikes expected in 2020.

Stocks in Asia mostly inched higher following the decision, led by a 1.26% jump for Hong Kong’s Hang Seng index, while mainland Chinese shares offered a more mixed picture.

The European Central Bank (ECB) will announce its latest monetary policy decision on Thursday afternoon, marking a debut for new President Christine Lagarde. Investors will be watching closely for hints on future policy decisions and indications as to whether Lagarde will continue in the same vein as her predecessor, Mario Draghi.

Back in Europe, voters head to the polls Thursday in the U.K.’s second general election since the landmark vote to leave the European Union in 2016. The election promises to be pivotal for the fate of Brexit and the country’s economic policy.

Investors worldwide are also monitoring trade negotiations between the U.S. and China ahead of Sunday’s deadline for new tariffs on $160 billion in Chinese goods.

Reuters reported, citing three sources, that U.S. President Donald Trump is expected to meet with top trade advisers on Thursday to discuss the planned tariffs, with markets braced for further turbulence after a bruising and protracted trade war between the world’s two largest economies.

On the data front, euro area industrial production figures for October are due Thursday morning.


Company: cnbc, Activity: cnbc, Date: 2019-12-12  Authors: elliot smith
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ECB holds rates steady at Lagarde’s debut policy meeting

The European Central Bank (ECB) kept its rates unchanged on Thursday following new President Christine Lagarde’s first monetary policy meeting in Frankfurt. The euro traded roughly flat against the dollar at $1.1132 following the announcement awhile equity markets turned slightly negative after marginal early gains. Lagarde suggested that the growth slowdown was stabilizing but that incoming data since October’s policy meeting “pointed to continued muted inflation pressures and weak euro area gr


The European Central Bank (ECB) kept its rates unchanged on Thursday following new President Christine Lagarde’s first monetary policy meeting in Frankfurt.
The euro traded roughly flat against the dollar at $1.1132 following the announcement awhile equity markets turned slightly negative after marginal early gains.
Lagarde suggested that the growth slowdown was stabilizing but that incoming data since October’s policy meeting “pointed to continued muted inflation pressures and weak euro area gr
ECB holds rates steady at Lagarde’s debut policy meeting Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-12  Authors: elliot smith
Keywords: news, cnbc, companies, holds, policy, lagardes, steady, meeting, rate, inflation, ecb, euro, level, rates, debut, forecast, 2022, growth


ECB holds rates steady at Lagarde's debut policy meeting

The European Central Bank (ECB) kept its rates unchanged on Thursday following new President Christine Lagarde’s first monetary policy meeting in Frankfurt. The Governing Council voted to keep the main deposit rate at the historic low of -0.5%, in line with market expectations, while the marginal lending facility remained at 0.25%. The ECB’s statement reiterated that rates will stay at the current level or lower until the central bank has seen the inflation outlook “robustly converge” to a level close to but below 0.2% and that underlying inflation has remained consistently convergent with that level. It also confirmed that net asset purchases had started in November at a monthly rate of 20 billion euros ($22.3 billion) and that this will continue to run “as long as necessary” to reinforce the accommodative policy stance. The euro traded roughly flat against the dollar at $1.1132 following the announcement awhile equity markets turned slightly negative after marginal early gains.

The ECB forecast annual real GDP growth for the euro area at 1.2% in 2019, 1.1% in 2020 and 1.4% in 2021 and 2022, an upward revision of 0.1% for 2019 and a downward shift of 0.1% for 2020 compared with September’s projections. Lagarde suggested that the growth slowdown was stabilizing but that incoming data since October’s policy meeting “pointed to continued muted inflation pressures and weak euro area growth dynamics.” “The risks to the euro area growth outlook relating to geopolitical factors, rising protectionism and vulnerabilities in emerging markets remain tilted to the downside, but have become somewhat less pronounced,” she added.

Inflation was revised up by 0.1% for 2020 but down by 0.1% to 1.4% for 2021, with 2022 forecast at 1.6%. “In our 2022 forecast for inflation, while the entire year is forecast at 1.6%, the fourth quarter is at 1.7%, so directionally it is slightly increasing across the course of 2022,” Lagarde said in her first press conference at the ECB’s helm. “Is it satisfactory? It is certainly directionally good, but is it the aim that we pursue? No,” she added. The former head of the International Monetary Fund (IMF) and former French finance minister inherited an inflation rate of 1.0% against the ECB target of “below but close to 2%” upon taking the reins in November.


Company: cnbc, Activity: cnbc, Date: 2019-12-12  Authors: elliot smith
Keywords: news, cnbc, companies, holds, policy, lagardes, steady, meeting, rate, inflation, ecb, euro, level, rates, debut, forecast, 2022, growth


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ECB holds rates steady at Lagarde’s debut policy meeting

The European Central Bank (ECB) kept its rates unchanged on Thursday following new President Christine Lagarde’s first monetary policy meeting in Frankfurt. The euro traded roughly flat against the dollar at $1.1132 following the announcement awhile equity markets turned slightly negative after marginal early gains. Lagarde suggested that the growth slowdown was stabilizing but that incoming data since October’s policy meeting “pointed to continued muted inflation pressures and weak euro area gr


The European Central Bank (ECB) kept its rates unchanged on Thursday following new President Christine Lagarde’s first monetary policy meeting in Frankfurt.
The euro traded roughly flat against the dollar at $1.1132 following the announcement awhile equity markets turned slightly negative after marginal early gains.
Lagarde suggested that the growth slowdown was stabilizing but that incoming data since October’s policy meeting “pointed to continued muted inflation pressures and weak euro area gr
ECB holds rates steady at Lagarde’s debut policy meeting Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-12  Authors: elliot smith
Keywords: news, cnbc, companies, rate, holds, meeting, ecb, steady, forecast, level, debut, inflation, 2022, policy, euro, rates, growth, lagardes


ECB holds rates steady at Lagarde's debut policy meeting

The European Central Bank (ECB) kept its rates unchanged on Thursday following new President Christine Lagarde’s first monetary policy meeting in Frankfurt. The Governing Council voted to keep the main deposit rate at the historic low of -0.5%, in line with market expectations, while the marginal lending facility remained at 0.25%. The ECB’s statement reiterated that rates will stay at the current level or lower until the central bank has seen the inflation outlook “robustly converge” to a level close to but below 0.2% and that underlying inflation has remained consistently convergent with that level. It also confirmed that net asset purchases had started in November at a monthly rate of 20 billion euros ($22.3 billion) and that this will continue to run “as long as necessary” to reinforce the accommodative policy stance. The euro traded roughly flat against the dollar at $1.1132 following the announcement awhile equity markets turned slightly negative after marginal early gains.

The ECB forecast annual real GDP growth for the euro area at 1.2% in 2019, 1.1% in 2020 and 1.4% in 2021 and 2022, an upward revision of 0.1% for 2019 and a downward shift of 0.1% for 2020 compared with September’s projections. Lagarde suggested that the growth slowdown was stabilizing but that incoming data since October’s policy meeting “pointed to continued muted inflation pressures and weak euro area growth dynamics.” “The risks to the euro area growth outlook relating to geopolitical factors, rising protectionism and vulnerabilities in emerging markets remain tilted to the downside, but have become somewhat less pronounced,” she added.

Inflation was revised up by 0.1% for 2020 but down by 0.1% to 1.4% for 2021, with 2022 forecast at 1.6%. “In our 2022 forecast for inflation, while the entire year is forecast at 1.6%, the fourth quarter is at 1.7%, so directionally it is slightly increasing across the course of 2022,” Lagarde said in her first press conference at the ECB’s helm. “Is it satisfactory? It is certainly directionally good, but is it the aim that we pursue? No,” she added. The former head of the International Monetary Fund (IMF) and former French finance minister inherited an inflation rate of 1.0% against the ECB target of “below but close to 2%” upon taking the reins in November.


Company: cnbc, Activity: cnbc, Date: 2019-12-12  Authors: elliot smith
Keywords: news, cnbc, companies, rate, holds, meeting, ecb, steady, forecast, level, debut, inflation, 2022, policy, euro, rates, growth, lagardes


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Watch Christine Lagarde speak at debut ECB press conference

Christine Lagarde is speaking in Frankfurt, Germany, for her first press conference as president of the European Central Bank. The former International Monetary Fund chief took the helm at the euro zone’s top financial institution last month. Analysts say she will also likely need to mend divisions at the bank over its recent policy measures under former President Mario Draghi. Global central banks have been easing mode this year, as the headwinds of U.S.-China trade tensions and signs of econom


Christine Lagarde is speaking in Frankfurt, Germany, for her first press conference as president of the European Central Bank.
The former International Monetary Fund chief took the helm at the euro zone’s top financial institution last month.
Analysts say she will also likely need to mend divisions at the bank over its recent policy measures under former President Mario Draghi.
Global central banks have been easing mode this year, as the headwinds of U.S.-China trade tensions and signs of econom
Watch Christine Lagarde speak at debut ECB press conference Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-12  Authors: cnbccom staff
Keywords: news, cnbc, companies, christine, month, germany, watch, speak, likely, ecb, press, signs, debut, conference, banks, president, easing, lagarde, policy, euro, central


Watch Christine Lagarde speak at debut ECB press conference

[The stream is slated to start at 08:30 ET. Please refresh the page if you do not see a player above at that time.]

Christine Lagarde is speaking in Frankfurt, Germany, for her first press conference as president of the European Central Bank.

The former International Monetary Fund chief took the helm at the euro zone’s top financial institution last month. She has committed to holding the ECB’s first policy review in 16 years. Analysts say she will also likely need to mend divisions at the bank over its recent policy measures under former President Mario Draghi.

Global central banks have been easing mode this year, as the headwinds of U.S.-China trade tensions and signs of economic weakness grip businesses and investors. The ECB reinstated its quantitative easing program and cut interest rates on bank reserves to -0.5% earlier this year, much to the dismay of some policymakers at the bank.

Investors are likely to monitor Lagarde’s presser for any signs as to the bank’s outlook for the euro zone and forward guidance. Europe’s economy has experienced sluggish growth this year, particularly on the back of a slowdown in Germany. Last month, data showed the country narrowly avoiding a technical recession in the third quarter.

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Company: cnbc, Activity: cnbc, Date: 2019-12-12  Authors: cnbccom staff
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Lagarde gives press conference at debut ECB meeting

Lagarde gives press conference at debut ECB meetingThe former IMF chief took the helm at the euro zone’s top financial institution in November.


Lagarde gives press conference at debut ECB meetingThe former IMF chief took the helm at the euro zone’s top financial institution in November.
Lagarde gives press conference at debut ECB meeting Cached Page below :
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Lagarde gives press conference at debut ECB meeting

Lagarde gives press conference at debut ECB meeting

The former IMF chief took the helm at the euro zone’s top financial institution in November.


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Christine Lagarde faces her first real test at ECB debut meeting

French President-designate of the European Central Bank (ECB) Christine Lagarde reacts during a meeting prior’s to attend a European Parliament’s Committee on Economic Affairs at the EU Parliament, in Brussels, on September 4, 2019. Steering markets with the language of monetary policy is a tricky business. New President Christine Lagarde will chair her first European Central Bank (ECB) meeting and the subsequent press conference on Thursday and all eyes and ears will be on her. “However, any hi


French President-designate of the European Central Bank (ECB) Christine Lagarde reacts during a meeting prior’s to attend a European Parliament’s Committee on Economic Affairs at the EU Parliament, in Brussels, on September 4, 2019.
Steering markets with the language of monetary policy is a tricky business.
New President Christine Lagarde will chair her first European Central Bank (ECB) meeting and the subsequent press conference on Thursday and all eyes and ears will be on her.
“However, any hi
Christine Lagarde faces her first real test at ECB debut meeting Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-11  Authors: annette weisbach
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Christine Lagarde faces her first real test at ECB debut meeting

French President-designate of the European Central Bank (ECB) Christine Lagarde reacts during a meeting prior’s to attend a European Parliament’s Committee on Economic Affairs at the EU Parliament, in Brussels, on September 4, 2019.

Steering markets with the language of monetary policy is a tricky business.

Every nuance counts and even semantics can move markets. New President Christine Lagarde will chair her first European Central Bank (ECB) meeting and the subsequent press conference on Thursday and all eyes and ears will be on her.

The big question is whether there will be any hints on future policy decisions.

“Thursdays press conference will be a watershed for financial markets. More realistically, the policies already announced and set on auto-pilot by (ex-chief Mario) Draghi, are unlikely to change, at least immediately,” said Lorenzo Codogno in a research note.

“However, any hint on the future direction of policies would be hugely important, and potentially highly relevant for financial markets.”

The new ECB president has announced a swift policy review, the first the euro zone central bank has performed since 2003. She might also see her primary task as reuniting the ECB’s Governing Council, healing the wounds from the controversial policy decision to reinstate quantitative easing (QE) in September. One indication for this interpretation is that in recent speeches she has placed more emphasis on the negative side effects of the current policy stance — more so than what Draghi would have ever done.


Company: cnbc, Activity: cnbc, Date: 2019-12-11  Authors: annette weisbach
Keywords: news, cnbc, companies, debut, lagarde, policy, christine, faces, european, bank, meeting, real, president, policies, central, ecb, press, test, markets


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ECB chief Christine Lagarde speaks of a new order in the world economy at debut speech

European Central Bank President Christine Lagarde called for a new policy mix in Europe on Friday and noted major movements in global trade and traditional economic models. “Ongoing trade tensions and geopolitical uncertainties are contributing to a slowdown in world trade growth, which has more than halved since last year. Emerging economies have relied on global trade and supply chains to boost their growth. Lagarde noted that the euro zone must adapt to these new realities and boost domestic


European Central Bank President Christine Lagarde called for a new policy mix in Europe on Friday and noted major movements in global trade and traditional economic models.
“Ongoing trade tensions and geopolitical uncertainties are contributing to a slowdown in world trade growth, which has more than halved since last year.
Emerging economies have relied on global trade and supply chains to boost their growth.
Lagarde noted that the euro zone must adapt to these new realities and boost domestic
ECB chief Christine Lagarde speaks of a new order in the world economy at debut speech Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-22  Authors: silvia amaro
Keywords: news, cnbc, companies, world, order, european, euro, speaks, chief, economy, debut, domestic, president, christine, markets, trade, global, ecb, speech, growth, lagarde


ECB chief Christine Lagarde speaks of a new order in the world economy at debut speech

European Central Bank President Christine Lagarde called for a new policy mix in Europe on Friday and noted major movements in global trade and traditional economic models. “Ongoing trade tensions and geopolitical uncertainties are contributing to a slowdown in world trade growth, which has more than halved since last year. This has in turn depressed global growth to its lowest level since the great financial crisis,” she said in a debut speech at the European Banking Conference in Frankfurt, adding that there had been changes of a more structural nature. “We are starting to see a global shift — driven mainly by emerging markets — from external demand to domestic demand, from investment to consumption and from manufacturing to services.” Emerging economies have relied on global trade and supply chains to boost their growth. However, the emergence of trade conflicts and technology are disrupting those economic models, the former head of the International Monetary Fund (IMF) said, adding that this was also the case in Europe.

04 November 2019, Berlin: Christine Lagarde, President of the European Central Bank (ECB), will give the laudation to President of the Bundestag Schäuble at the “VDZ Publishers’ Night 2019 picture alliance | picture alliance | Getty Images

‘World trade is being reordered’

“World trade is being reordered as new technologies disrupt conventional supply chains and workplace organization, and as potential new risks emerge from climate change. All this obviously has implications for our external sector, not least because the euro area’s exports are intense in capital and intermediate goods,” she said. The world economy has focused on international trade and opening up markets as a means to grow further in the last decades. However, certain countries, including the U.S., have recently shifted attention away from multilateral trade, bringing with it economic uncertainty that has soured sentiment and occasionally roiled financial markets. Lagarde noted that the euro zone must adapt to these new realities and boost domestic growth. “Europe needs to innovate and invest to respond to these challenges and preserve its competitiveness in the longer run. But it also suggests that the high rates of trade growth that we are used to seeing are no longer an absolute certainty,” Lagarde warned. The euro area is set to grow 1.1% this year and 1.2% in 2020, according to ECB forecasts released in September. These were lowered from a previous estimate made in June. Lagarde said that while she believed the region should remain open to multilateral trade, it should also focus on taking advantage of its domestic market. “The answer lies in converting the world’s second largest economy into one that is open to the world but confident in itself — an economy that makes full use of Europe’s potential to unleash higher rates of domestic demand and long-term growth,” she said.

‘A new European policy mix’


Company: cnbc, Activity: cnbc, Date: 2019-11-22  Authors: silvia amaro
Keywords: news, cnbc, companies, world, order, european, euro, speaks, chief, economy, debut, domestic, president, christine, markets, trade, global, ecb, speech, growth, lagarde


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France’s finance minister says he’s glad that Donald Trump isn’t a member of the ECB’s board

French Finance Minister Bruno Le Maire voiced his appreciation that ultra-dovish views, like those expressed by President Donald Trump, weren’t currently being represented on the board of the European Central Bank (ECB). “We are actively competing with nations who openly cut interest rates so that now many are actually getting paid when they pay off their loan, known as negative interest,” Trump said earlier this month. The 19-member euro zone is divided over the application of negative interest


French Finance Minister Bruno Le Maire voiced his appreciation that ultra-dovish views, like those expressed by President Donald Trump, weren’t currently being represented on the board of the European Central Bank (ECB).
“We are actively competing with nations who openly cut interest rates so that now many are actually getting paid when they pay off their loan, known as negative interest,” Trump said earlier this month.
The 19-member euro zone is divided over the application of negative interest
France’s finance minister says he’s glad that Donald Trump isn’t a member of the ECB’s board Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-21  Authors: silvia amaro
Keywords: news, cnbc, companies, frances, policy, donald, positive, ecbs, finance, glad, tool, rates, member, trump, negative, isnt, minister, cut, rate, hes, interest, ecb


France's finance minister says he's glad that Donald Trump isn't a member of the ECB's board

French Finance Minister Bruno Le Maire voiced his appreciation that ultra-dovish views, like those expressed by President Donald Trump, weren’t currently being represented on the board of the European Central Bank (ECB).

Asked about negative interest rates in the region, and Trump’s vehement pleas for the central bank policy, Le Maire told CNBC’s Karen Tso: “It’s better that Donald Trump is not a member of the board of the ECB, I am not sure it would be the best situation for the ECB.”

His comments Wednesday come as Trump voices support for significant policy easing in the U.S., calling on the Federal Reserve to do more. The Fed has cut its main benchmark rate three times this year, but it’s still in positive territory.

“We are actively competing with nations who openly cut interest rates so that now many are actually getting paid when they pay off their loan, known as negative interest,” Trump said earlier this month. “Whoever heard of such a thing?”

“Give me some of that,” he said. “Give me some of that money. I want some of that money.”

The 19-member euro zone is divided over the application of negative interest rates — an unconventional monetary policy tool that aims to boost spending rather than saving. The ECB announced its first cut to a negative rate in 2014 and it hasn’t brought it back into positive territory since. As a result, there’s a growing debate in Europe over the efficiency of such a monetary policy tool. It effectively charges banks who park cash at the ECB which can dent their profits, but it also means governments receive extra when they borrow money.


Company: cnbc, Activity: cnbc, Date: 2019-11-21  Authors: silvia amaro
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Excessive risk-taking and falling bank profitability cloud euro zone’s growth, ECB says

A euro currency symbol sits on display in the visitor centre at the European Central Bank (ECB) building in Frankfurt, Germany, on Monday, Nov. 4, 2019. TPhotographer: Alex Kraus/Bloomberg via Getty ImagesSigns of excessive financial risk-taking as well as slowdown in bank profitability are some of the biggest challenges in the euro area, the European Central Bank (ECB) said on Wednesday. Riskier firms are taking on more borrowing and property prices continue to rise in “a number” of euro area c


A euro currency symbol sits on display in the visitor centre at the European Central Bank (ECB) building in Frankfurt, Germany, on Monday, Nov. 4, 2019.
TPhotographer: Alex Kraus/Bloomberg via Getty ImagesSigns of excessive financial risk-taking as well as slowdown in bank profitability are some of the biggest challenges in the euro area, the European Central Bank (ECB) said on Wednesday.
Riskier firms are taking on more borrowing and property prices continue to rise in “a number” of euro area c
Excessive risk-taking and falling bank profitability cloud euro zone’s growth, ECB says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-20  Authors: silvia amaro
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Excessive risk-taking and falling bank profitability cloud euro zone's growth, ECB says

A euro currency symbol sits on display in the visitor centre at the European Central Bank (ECB) building in Frankfurt, Germany, on Monday, Nov. 4, 2019. TPhotographer: Alex Kraus/Bloomberg via Getty Images

Signs of excessive financial risk-taking as well as slowdown in bank profitability are some of the biggest challenges in the euro area, the European Central Bank (ECB) said on Wednesday.

The euro zone has been struggling to grow in the aftermath of the sovereign debt crisis of 2011. The ECB, which oversees monetary policy across the 19-member region, has adopted several stimulus measures since then to boost the economy. In 2018, the ECB decided to scale back some of that stimulus amid improved data. However, the central bank returned to its easing stance in full force in September this year as prices and growth rates are treading water.

“Downside risks to global and euro area economic growth have increased and continue to create financial stability challenges,” the ECB said in a press release Wednesday.

The central bank had already warned in May of “persistent downside risks,” which included global trade uncertainty and the U.K.’s departure from the EU.

“While the low interest rate environment supports the overall economy, we also note an increase in risk-taking which could, in the medium term, create financial stability challenges”, Luis de Guindos, Vice-President of the ECB said in a statement.

According to the central bank, institutions such as investment funds and insurance companies have been more risk-taking in the current low interest rate environment. This means that in case of a sudden market shock, for instance, stress among these institutions could spread to the wider financial system – leading to losses for companies and individuals.

The ECB also cited risks in the property market. Riskier firms are taking on more borrowing and property prices continue to rise in “a number” of euro area countries.

Meanwhile, the ECB report also states that bank profitability in the euro area is likely to deteriorate. The report states that past misconduct by banks has weighed on global bank profitability. “While US banks were particularly hit by misconduct costs in the immediate aftermath of the global financial crisis, European banks have been more exposed since 2015.”

The euro area is set to grow 1.1% this year and 1.2% in 2020, according to ECB forecasts released in September.


Company: cnbc, Activity: cnbc, Date: 2019-11-20  Authors: silvia amaro
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