ECB de Guindos Not Very Convincing on the Next Stimulus Package

Posted Wednesday, November 25, 2020 by
Skerdian Meta • 1 min read

The European Central Bank opened its purse wide in spring, during the first coronavirus lock-downs, to help revive the economy, which went into a major recession. In summer the economy of the Eurozone bounced back, but it started weakening in September and services fell back in recession.

Now, after the new lock-down measures, the ECB is feeling the pressure once again, as the economy weakens further and they are getting ready for he second round of stimulus. But, the comments form the ECB vice president Luis de Guindos are not too convincing, which might turn the Euro berish, if markets are not satisfied with the new PEPP programme.

 

Comments by ECB vice president, Luis de Guindos

  • ECB currently calibrating different stimulus options
  • ECB will consider oil price, vaccine in December decision
  • News of vaccine bolstered sentiment, animal spirits
  • Composition of December stimulus depends on forecasts
  • The goal is to keep credit flowing
The latest suggestion by de Guindos above seems to be that they may do less than what they intended to do given recent developments in the vaccine space. I reckon a combination of extending PEPP stimulus and enhancing TLTROs is still the likeliest option, but perhaps they may scale back on the size of the stimulus.
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