European Central Bank policymakers are increasingly leaning toward rewarding ban...
WASHINGTON/FRANKFURT - European Central Bank policymakers are increasingly leaning toward rewarding banks for lending to households and businesses but are mostly skeptical about giving lenders a reprieve from a charge on their idle cash, four sources told Reuters.
The sources said rate-setters, who met in Frankfurt on Wednesday, were now open to offering a zero or even negative interest rate to banks that pass through into the economy the cash they borrow under the ECB’s third Targeted Long-Term Refinancing Operation , due to start in September. With the growth outlook fading faster than feared, even hawkish policymakers have given up pricing the loans at the private market rate. Some are even discussing offering the TLTROs at minus 0.4 percent, which is currently the ECB’s deposit rate, the sources said.
Many rate setters felt that the relief for banks, which are currently paying a 0.4 percent annualized rate of interest on some 1.9 trillion euro worth of idle cash, would be modest and outweighed by the risks. Even policymakers who were open to the idea of tiering acknowledged it was a hard sell and would further complicate the ECB’s policy framework, the sources said.ECB rate-setter and Italian central bank governor Ignazio Visco said the ECB may assess the side effects of its negative rate as soon as June but that the figures at stake were “not very large”.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
European markets seen slightly higher ahead of ECB rate decision, Brexit summitEuropean stocks are set to open slightly higher Wednesday, with EU leaders likely to grant British Prime Minister Theresa May a second delay to Brexit.
Read more »
ECB will reportedly ask Deutsche Bank to raise fresh funds for mergerThe European Central Bank will ask Deutsche Bank to raise fresh funds before it gives the go-ahead for a merger with a state-backed rival, a person with direct knowledge of the matter said.
Read more »
ECB will ask Deutsche Bank to raise fresh funds for merger: sourceThe European Central Bank will ask Deutsche Bank to raise fresh funds before it ...
Read more »
One euro zone bank falls short of ECB capital requirementsOne euro zone bank is falling short of the European Central Bank's capital ...
Read more »
Mario Draghi’s successor at the ECB has plenty to doThe ECB has come into its own, but 2019 will still be a momentous year
Read more »
ECB sop to banks will only help at the marginPresident Mario Draghi is considering ways to ease the pain that negative policy rates inflict on banks, such as tiered deposits in Japan and Sweden. Savings-rich German lenders would benefit most. But any earnings boost would be modest and does nothing to remedy high costs.
Read more »
Treasury yields edge lower as investors digest Fed minutesU.S. government debt yields were slightly lower on Thursday morning, continuing a downward move after the European Central Bank (ECB) held interest rates steady and the Federal Reserve released the minutes of its latest meeting.
Read more »
ECB leaves monetary policy unchangedThe European Central Bank, as expected, made no changes Thursday to interest rates or other monetary policy measures. The ECB left its main lending rate at...
Read more »
Economists trim euro zone's inflation and growth forecasts: ECB surveyEconomists are trimming their inflation and growth forecasts for the euro zone a...
Read more »
In placeholder meeting, ECB hopes to instil confidenceFRANKFURT Reuters) - The European Central Bank is all but certain to keep policy...
Read more »