over 3 years ago • 2 mins
The European Central Bank (ECB) can’t exactly lay eyes on its new enemy, but the support it’s expected to announce on Thursday should help the eurozone keep swinging anyway 🥊
The ECB started its $840 billion bond-buying program back in March, with the aim of cushioning the economic blow of the coronavirus pandemic on eurozone countries 💶 And since it’s only spent a third of that earmarked money so far, it might seem unnecessary to increase that pot by, say, $560 billion. But according to Bloomberg, that’s exactly what most investors are expecting the ECB to do – and if it doesn’t, there could be a sharp sell-off of the region’s assets.
Those investors probably just like the idea of a safety net 🤔 Just look at the US, which previously promised unlimited bond-buying: the Federal Reserve (the Fed) hasn’t bought a single bond as part of the program, but just the talk of it seems to have been enough to keep investors from panic-selling and inspire companies to issue their own new bonds.
The Fed – which is still hashing out the finer details of its bottomless bond-buying – hasn’t actually launched the initiative yet, but some analysts aren’t sure markets actually need its extra support anymore 📈 In any case, companies might be reluctant to take its help for fear of looking needy while rebounding markets as a whole look strong. Equally, they may snap up the offer just in case they need some cash for a rainy – or, er, COVIDy – day.
The Bank of England this week warned the country’s commercial banks to prepare for the UK to leave the European Union (EU) without a long-hoped-for trade deal 🇪🇺 This week’s negotiations between the two haven’t shown much progress, which makes it all the more likely British banks will lose their easy access to Europe’s financial markets.
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