BENGALURU (Reuters) – The European Central Bank may have missed its opportunity to raise interest rates before the next downturn, according to a Reuters poll that shows a majority of central bank policy watchers aren’t confident they will.
In a poll taken after the ECB said it would offer new long-term loans to banks later this year, nearly 90 percent of economists who answered an extra question also said it would not conduct any more asset purchases until at least the end of 2020.
ECB - Growth - Forecasts - Polling - Period
That comes even though the ECB cut its 2019 growth forecasts to their lowest since polling began for the period, more than two years ago, according to the poll of about 100 economists. Inflation is not expected to pick up to the ECB’s target until at least 2022.
The consensus forecast now is that the ECB will not raise rates until even later next year compared with last month’s poll. More than 60 percent of economists who answered an extra question said they were not confident the central bank will raise them before the next economic downturn.
Cycle - Point - Slowdown - Phase - Peter
“Definitely, the cycle has already reached the highest point and we are now already in the slowdown phase,” said Peter Vanden Houte, chief euro zone economist at ING.
“So, the ECB probably did miss the bus in increasing rates. But the situation remains that from conventional tools, there is no scope at all to do something more if the economy goes into a more severe downturn.”
Survey - Backdrop - Economy - Trade - Conflict
The survey was conducted against a backdrop of a slowing global economy, an ongoing U.S.-China trade conflict, and an impasse in Britain over leaving the European Union, and it found economists trimming growth forecasts.
“We think the euro zone is a shock away from a recession,” noted Luigi Speranza, chief global economist at BNP Paribas. “Against this background, we think...
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