ECB boosts bond-buying by 600b euros as retail battered

Business | Agencies 5 Jun 2020

The European Central Bank intensified its response to the coronavirus recession with a bigger-than-anticipated increase to its emergency bond-buying program.

At a virtual meeting yesterday, President Christine Lagarde and colleagues decided to expand the amount of bond purchases by 600 billion euros (HK$5.22 trillion) and extended their duration until at least the end of June 2021.

The central bank said they would be conducted in a "flexible manner over time, across asset classes and among jurisdictions," with proceeds from maturing bonds reinvested at least until the end of 2022.

The decision also highlights emergency bond purchases as the ECB's main crisis fighting tool. The ECB kept its main interest rate unchanged at 0 percent and its deposit rate, now its de facto benchmark, at minus 0.5 percent.

Euro-area retail sales fell more than 11 percent for a second month in April, with clothing down 21 percent compared with March. Lockdowns have battered retailing, with separate figures showing champagne sales in French supermarkets fell 63 percent in April.

Outside Europe, Australian retail sales fell a seasonally adjusted 17.7 percent in April, their biggest on record, from an 8.5 percent jump in March

And in the United States, the number of Americans filing for unemployment benefits dropped below 2 million last week for the first time since mid-March, but remained astonishingly high. New claims totaled a seasonally adjusted 1.877 million for the week ended May 30, down from 2.126 million the prior week.

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