The European Central Bank will not follow the Federal Reserve in cutting interes...
BENGALURU - The European Central Bank will not follow the Federal Reserve in cutting interest rates to soften the economic threat from the coronavirus outbreak, even though the median chances of a euro zone recession have doubled in the last month.
Taken after the Fed stunned financial markets on Tuesday with an emergency 50 basis point rate cut, its biggest since the global financial crisis, the survey concluded the ECB will keep the deposit rate on hold until at least the end of 2022. Only 11 of 52 economists polled forecast a 10 basis point deposit rate cut to -0.60% at the March 12 meeting. But nearly 40% expect at least one rate cut by the end of this year.
Euro zone growth forecasts in the latest Reuters poll were chopped modestly for the first half of the year, but now show close to no growth at all, at just 0.1% in the current quarter. “The coronavirus spread is the proverbial straw that will break the camel’s back and push the euro zone economy into a recession,” he said.
Twenty-eight of 40 economists, 70%, said the ECB should ease monetary policy further in response to the coronavirus outbreak.
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