BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Categorized | Economy

ECB officials raise fears over recovery

Posted on November 17, 2016

The European Central Bank’s governing council has delivered a bleak assessment of the eurozone’s economic prospects, suggesting that policymakers will unveil a fresh round of stimulus at their December vote.

Analysts expect the council to make a decision in early December on whether to extend its landmark quantitative easing programme past the current deadline of March 2017.

The minutes of the council’s 17 November meeting, published on Thursday, indicate an extension is likely, revealing the group of 25 officials is becoming increasingly concerned about the region’s recovery.

Fears over mounting protectionism, paltry wage growth and a lack of investment were among the risks flagged in the minutes.

Crucially for an institution whose sole official policy goal is an inflation target of just under 2 per cent, officials believed these risks to growth would weigh on inflation — which at 0.5 per cent remains disappointingly low.

“The prevalence of downside risks to the outlook for economic activity was seen to entail downside risks to the inflation outlook,” the minutes said.

While officials believed they did not yet have enough information to justify unleashing a fresh round of bond purchases, most agreed that they would be in a better position to do so by the time of the next policy vote on December 8.

The council will decide then whether to extend its landmark quantitative easing programme at the current pace of €80bn-worth of bond purchases a month. It could also announce changes to the design of the programme, to enable it to counter a scarcity in asset eligible for the eurozone’s central bankers to buy.

The minutes will only add to expectations that the ECB will continue to buy bonds at the same pace until at least the second half of 2017. Reports earlier this year had suggested that the ECB could begin to slow the pace of its purchases after the spring.