AFP, Frankfurt :
The European Central Bank, widely expected to hold fire on monetary policy next week, will likely prepare the ground for more stimulus measures in September as the economic fallout for the eurozone from Brexit becomes clearer, analysts predicted.
The ECB’s decision-making governing council is scheduled to hold its regular policy meeting on Thursday, a month after Britain voted to quit the European Union.
While the initial market turmoil triggered by the shock outcome has abated, taking the heat off the ECB and other major central banks to charge to the rescue immediately, observers believe the true extent of the economic damage will only become discernible later.
Britain’s new prime minister Theresa May has yet to decide when to trigger Article 50 of the Lisbon Treaty, formally notifying Brussels of Britain’s exit and starting a two-year countdown on divorce from the EU. The full economic consequences of Brexit are only likely to become clear during the negotiations on the terms of its exit.
The Bank of England already held fire on an interest rate cut last week, although it flagged it will likely act at its next meeting in August.
The ECB is similarly likely to bide its time, analysts said.
“No further measures are expected at the meeting as the ECB was reported to be relieved about the markets’ rather muted reaction to the Brexit vote,” said Commerzbank economist Michael Schubert.
The European Central Bank, widely expected to hold fire on monetary policy next week, will likely prepare the ground for more stimulus measures in September as the economic fallout for the eurozone from Brexit becomes clearer, analysts predicted.
The ECB’s decision-making governing council is scheduled to hold its regular policy meeting on Thursday, a month after Britain voted to quit the European Union.
While the initial market turmoil triggered by the shock outcome has abated, taking the heat off the ECB and other major central banks to charge to the rescue immediately, observers believe the true extent of the economic damage will only become discernible later.
Britain’s new prime minister Theresa May has yet to decide when to trigger Article 50 of the Lisbon Treaty, formally notifying Brussels of Britain’s exit and starting a two-year countdown on divorce from the EU. The full economic consequences of Brexit are only likely to become clear during the negotiations on the terms of its exit.
The Bank of England already held fire on an interest rate cut last week, although it flagged it will likely act at its next meeting in August.
The ECB is similarly likely to bide its time, analysts said.
“No further measures are expected at the meeting as the ECB was reported to be relieved about the markets’ rather muted reaction to the Brexit vote,” said Commerzbank economist Michael Schubert.
