European Central Bank policymakers set the stage for a June 10 showdown over the future of their emergency bond purchases when they met in April but stopped short of discussing their next move, the account of their meeting showed on Friday.
The ECB, which is already providing record support, has helped the recession-hit eurozone economy through its worst crisis to date. But a robust recovery, coupled with a jump in inflation, will be forcing policymakers to debate whether to start dialling back the ECB’s €1.85 trillion pandemic emergency purchase programme.
Arguments are stacking up fairly evenly on both sides, suggesting a difficult decision next month.
The latest wave of Covid-19 is receding, economies are reopening and growth is already surging, indicating that the “emergency”, a key premise of the ECB’s current support measures, is coming to an end.
But the 19-country currency bloc will need another year to grow back to its pre-crisis level, borrowing costs are already getting uncomfortably high, the euro’s strength is concerning and inflation, the ECB’s primary focus, will continue to languish below its target for years to come.
“The monetary policy meeting in June would provide the next opportunity to conduct a thorough assessment of financing conditions and the inflation outlook,” the ECB said in the account of the April 22 meeting.
Policymakers made it clear that even after PEPP, the ECB would provide plenty of support for years to come.
“Ample monetary policy support remained crucial beyond the pandemic period in order to support inflation and return it to the inflation aim,” the ECB added.
Even as they recounted risks, policymakers appeared pleased with how the market had reacted to their March decision to speed up bond purchases.
The monetary policy meeting in June would provide the next opportunity to conduct a thorough assessment of financing conditions and the inflation outlook
“Recent financial market developments had had a positive effect on financing and financial conditions in the euro area. Sovereign yields and spreads had remained compressed and stock prices had risen, while the euro exchange rate had appreciated only slightly,” the account said.
However, they seemed especially concerned about the firming of the euro against the dollar.
“It was underlined that a further appreciation of the exchange rate could have adverse implications for the inflation outlook,” the ECB added.
PEPP is set to expire next March at the earliest, but the scheme, now running at around €80 billion a month, will not end overnight and could take several quarters to taper.
Several conservative policymakers, including Klaas Knot of the Netherlands and Martins Kazaks from Latvia, have already made the case for starting to step back from PEPP as the recovery gets under way.
But winding down the emergency scheme will be far from the end of ECB support and stimulus is likely to be transferred to the bank’s Asset Purchase Programme, which operates under more rigid rules.
The key decision facing policymakers in June will be whether to signal this “rotation” from PEPP to APP is starting or conclude that emergency conditions remain.
They will also need to decide on the volume of bond purchases over the coming quarter and whether the recent rise in bond yields, fuelled in part by rising US borrowing costs, is warranted by the outlook.
'Unrivaled: Why America Will Remain the World’s Sole Superpower'
Michael Beckley, Cornell Press
MATCH INFO
What: 2006 World Cup quarter-final
When: July 1
Where: Gelsenkirchen Stadium, Gelsenkirchen, Germany
Result:
England 0 Portugal 0
(Portugal win 3-1 on penalties)
FROM%20THE%20ASHES
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If you go
The flights
There are various ways of getting to the southern Serengeti in Tanzania from the UAE. The exact route and airstrip depends on your overall trip itinerary and which camp you’re staying at.
Flydubai flies direct from Dubai to Kilimanjaro International Airport from Dh1,350 return, including taxes; this can be followed by a short flight from Kilimanjaro to the Serengeti with Coastal Aviation from about US$700 (Dh2,500) return, including taxes. Kenya Airways, Emirates and Etihad offer flights via Nairobi or Dar es Salaam.
Points Classification after Stage 1
1. Geraint Thomas (Britain / Team Sky) 20
2. Stefan Kueng (Switzerland / BMC Racing) 17
3. Vasil Kiryienka (Belarus / Team Sky) 15
4. Tony Martin (Germany / Katusha) 13
5. Matteo Trentin (Italy / Quick-Step) 11
6. Chris Froome (Britain / Team Sky) 10
7. Jos van Emden (Netherlands / LottoNL) 9
8. Michal Kwiatkowski (Poland / Team Sky) 8
9. Marcel Kittel (Germany / Quick-Step) 7
10. Edvald Boasson Hagen (Norway / Dimension Data) 6
Dhadak
Director: Shashank Khaitan
Starring: Janhvi Kapoor, Ishaan Khattar, Ashutosh Rana
Stars: 3
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Company%20profile
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Indoor cricket World Cup:
Insportz, Dubai, September 16-23
UAE fixtures:
Men
Saturday, September 16 – 1.45pm, v New Zealand
Sunday, September 17 – 10.30am, v Australia; 3.45pm, v South Africa
Monday, September 18 – 2pm, v England; 7.15pm, v India
Tuesday, September 19 – 12.15pm, v Singapore; 5.30pm, v Sri Lanka
Thursday, September 21 – 2pm v Malaysia
Friday, September 22 – 3.30pm, semi-final
Saturday, September 23 – 3pm, grand final
Women
Saturday, September 16 – 5.15pm, v Australia
Sunday, September 17 – 2pm, v South Africa; 7.15pm, v New Zealand
Monday, September 18 – 5.30pm, v England
Tuesday, September 19 – 10.30am, v New Zealand; 3.45pm, v South Africa
Thursday, September 21 – 12.15pm, v Australia
Friday, September 22 – 1.30pm, semi-final
Saturday, September 23 – 1pm, grand final
COMPANY%20PROFILE%20
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Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
More coverage from the Future Forum
The Outsider
Stephen King, Penguin
RESULT
Everton 2 Huddersfield Town 0
Everton: Sigurdsson (47'), Calvert-Lewin (73')
Man of the Match: Dominic Calvert-Lewin (Everton)
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
COMPANY%20PROFILE
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The President's Cake
Director: Hasan Hadi
Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem
Rating: 4/5
More Expo 2020 Dubai pavilions:
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
All you need to know about Formula E in Saudi Arabia
What The Saudia Ad Diriyah E-Prix
When Saturday
Where Diriyah in Saudi Arabia
What time Qualifying takes place from 11.50am UAE time through until the Super Pole session, which is due to end at 12.55pm. The race, which will last for 45 minutes, starts at 4.05pm.
Who is competing There are 22 drivers, from 11 teams, on the grid, with each vehicle run solely on electronic power.
