Why the ECB Followed the Fed’s Flip-Flopping
Extraordinary steps tell markets to expect sharply slower growth, continued low interest rates and increased central bank liquidity.
A new direction.
Photographer: Thomas Lohnes/Getty Images
The European Central Bank on Thursday announced four dovish policy measures that went beyond what markets had expected. At the conclusion of its policy meeting, the bank stressed that its extraordinary steps would be highly responsive to data and provide greater policy optionality. The markets will most likely hear messages that have broader implications.
The ECB said it would introduce a new round of targeted longer-term refinancing operations, known as TLTROs, that provide additional funding to banks; push back to December the guidance on a first interest rate hike; reinvest in full the maturing principal payments; and operate fixed-rate tender procedures with full allotment.