TORONTO, ON / ACCESSWIRE / December 11, 2020 / Finance executives at Toronto-based Hamilton Chukyo Brokerage has today commented on the European Central Bank extending two core stimulus schemes to boost the economy by the end of next year, until vaccinations are readily obtainable to promote recovery.
"Respondents are expecting that lawmakers will allocate a further six months and EUR 500 billion to their €1.35 trillion emergency bond-purchase scheme during their online meeting on December 10," commented Michael Williams, Head of Private Wealth Management at Hamilton Chukyo Brokerage. "The Governing Council is also required to provide additional long-term loans to banks and to extend the time over which they obtain increased benefits to keep credit circulating to businesses and households," he added.
With a surge in pathogens pushing policymakers to enforce new controls on commercial development, the ECB has also pledged further intervention. Officials, including President Christine Lagarde, emphasized the Pandemic Emergency Buying Scheme and tailored long-term loans to banks, the so-called TLTROs, as the key instruments of the organization during the crisis.
According to data gathered by Hamilton Chukyo Brokerage, none of the 33 economists polled expect a reduction in interest rates next week.
Although recent developments in vaccinations against Covid-19 make it possible that the pandemic will quickly be controlled, the economic effects, such as excessive debt and increased unemployment, are likely to be around longer. Other challenges persist, such as the European Union's inability to negotiate terms on its €1.8 trillion collective spending package and its inability to strike a trade agreement with the United Kingdom before the date of December 31.
"The end of the health crisis, which now appears likely in the course of 2021, does not mean the end of the economic crisis," commented Anthony Roberts, Head of Institutional Trading at Hamilton Chukyo Brokerage. "The ECB is likely to communicate its willingness to ensure that the path toward a full recovery will continue to be facilitated by very supportive liquidity and financial conditions," he added.
On top of further bond purchases-estimates ranged from EUR 250 billion to EUR 650 billion-economists even expect the ECB to provide banks with much more advantageous access to its long-term loans. Exceptional conditions that provide lenders with a financial opportunity to expand lending to the real economy are expected to be renewed by six months until the end of 2021.
In addition, most of those polled expect that another round of long-term loans would be presented on much improved rates on a quarterly basis. Extension of maturity-currently three years-is the most possible alternative.
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Hamilton Chukyo Brokerage provides financial advice and asset management services to private, institutional and corporate clients worldwide.
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SOURCE: Hamilton Chukyo Brokerage
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