Central Bank stimulus – Despite confirmed COVID-19 case numbers continuing to mount in various countries, as global deaths surpass 450,000, the economy looks to be slowly opening again across Europe. European leaders begin the effort to hash out the 750-billion-euro stimulus programme, deciphering where the aid is most required. The European Central Bank (ECB) also carried out its biggest ever single injection of liquidity into the Eurozone’s money markets. This comes as they look to push interest rates further into negative territory. Banks borrowed €1.308 trillion from the ECB’s latest targeted long-term refinancing operation, with money being offered at a rate of -1% for banks.
The Bank of England (BoE) has continued to increase its asset purchase programme by at least another £100 billion, after a statement from the organisation for Economic Cooperation and Development warned that the UK economy will shrink more than any of the other G7 countries this year. The country has a high exposure to services, which have suffered the most following lockdown measures being imposed. In the same announcement, in which a further £100 billion stimulus package was announced, the BoE announced they would slow the pace of their asset purchase programme. This announcement didn’t go down well with investors and the markets gloomy response suggests UK assets will be more vulnerable to shifts in
sentiment in the coming weeks, as investors grapple with uncertainties around Brexit and the growth shock from the coronavirus pandemic.
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