It has traded as low as minus 0.125 per cent earlier this week.
Advertisement
The ECB left the bloc’s main interest rate unchanged at 0% at a meeting of the Bank’s general council.
Bank President Mario Draghi seemed relatively confident about the economy and less inclined to hint at more stimulus than some analysts had expected.
The pan-European STOXX 600 index was down 0.4 percent in early trading, adding to a pullback from the previous session after some investors expressed disappointment at the fact that the European Central Bank (ECB) had not discussed an extension of the timetable for its economic stimulus programme.
Draghi had his usual stern words for the structural reform efforts of the region’s governments, saying they needed to be “substantially stepped up” to raise productivity, improve the business environment, and boost infrastructure. It also said it would not extend the duration of its bond-buying stimulus program.
Across the Atlantic, data from the Labor Department showed USA jobless claims unexpectedly fell to a two-month low last week. It said it was still buying some 80 billion euros of assets a month.
Nonetheless, it is probably just a matter of months before it eases policy further, acknowledging that inflation just isn’t moving higher, despite free credit to banks, record low interest rates and money printing worth 1.2 trillion euros ($1.35 trillion) in the past year and a half.
Easiest options could include buying bonds yielding less than the bank’s -0.4 percent deposit rate, extending the maturity range of eligible bonds to 30 years from 20 years and buying an even bigger portion of a certain bond issue.
The STOXX Europe 600 Healthcare index underperformed to shed 0.7 percent, with Novo Nordisk down 1.7 percent after JP Morgan cut its rating on the stock to “neutral” from “overweight”.
“It’s been many, many days since we’ve had a substantive move either to the upside or the downside in the market”, said Erik Davidson, chief investment officer for Wells Fargo Private Bank.
The ECB staff’s economic estimates showed inflation is expected to increase only gradually.
Policymakers have already slashed interest rates into negative territory and are now injecting a whopping €1.7 trillion worth of cash into the economy.
He said inflation would take a little longer than previously forecast to get to a level just below 2%, “but not much longer”.
While the eurozone is enjoying moderate growth, inflation continues to lag well below target, despite a raft of stimulus measures, and unemployment is high at 10.1 percent and falling only slowly.
Advertisement
Meanwhile, speaking in front of a Treasury Committee, the Bank of England Governor Mark Carney said he was absolutely “serene” about the risk the Bank outlined in the lead-up to the European Union referendum in June. Expectations are for the Fed to hold rates unchanged despite another round of strong labor market data on Thursday.
