ECB’s Rehn Calls for Significant, Impactful Stimulus Package
ECB’s Rehn Calls for Significant Stimulus Package in September
(Bloomberg) --
The European Central Bank should come up with an “impactful and significant” stimulus package at its next meeting in September, policy maker Olli Rehn was reported as saying on Thursday.
In an interview with the Wall Street Journal, Rehn said that it was better for the ECB to overshoot than undershoot market expectations when it comes to new support measures. His comments weakened the euro and sent bond yields lower.
The remarks from the Finnish central banker come amid growing concern about a deepening global downturn. The German economy shrank in the second quarter and yields on U.S. and U.K. long-term bonds fell below their shorter equivalents in what is typically seen as a harbinger of a recession.
The euro fell to its low of the day, down 0.3% at $1.1108.
The ECB is already expected to announce fresh measures to jump-start the euro-zone economy when policy makers meet on Sept. 12, with most economists predicting at least a cut in the deposit rate from the current minus 0.4%. President Mario Draghi signaled last month that all options are on the table, including a potential restart of quantitative easing.
Rehn didn’t rule out adding equities to the program, according to the Wall Street Journal, but said the decision will depend on an assessment of ECB staff. He spoke in favor of adjusting the current rules of the program, which limit purchases to 33% of the debt of any euro-zone government, the newspaper said.
The ECB could also sweeten the terms of its longer-term loans to banks that will be offered for the first time in September, Rehn added.
To contact the reporter on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow
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