According to Bloomberg, Mario Draghi said the European Central Bank may bolster stimulus in March as threats to the euro-area recovery mount. The single currency slid.
“Downside risks have increased again amid heightened uncertainties about emerging-market growth prospects,” the ECB president told reporters in Frankfurt on Thursday after officials kept interest rates unchanged at record lows. “The credibility of the ECB would be harmed if we weren’t ready to revise the monetary-policy stance.”
The ECB risks seeing its inflation-boosting package of negative interest rates and at least 1.5 trillion euros ($1.6 trillion) in bond purchases thwarted by a Chinese economic slowdown that threatens to cool global growth. Emphasizing the central bank’s commitment to its ultra-loose policy settings, Draghi began his statement by reverting to forward-guidance language and declaring that interest rates will “remain at present or lower levels for an extended period of time.”
The ECB kept its deposit rate at minus 0.3 percent and the main refinancing rate at 0.05 percent.
How much additional intervention does Europe want? 13 countries already have negative 2 year sovereign yields.
Meanwhile, The Netherlands is seeing all-time lows in their 2 year sovereign yield (below the ECB Main Refinancing Rate).
Let’s see how more stimulus will drive Dutch (and other sovereign yields) deeper into negative territory.