European Central Bank officials worried about global turmoil

FRANKFURT -- Top officials from the European Central Bank expressed concern at their last meeting about turbulent financial markets and the increasingly dim outlook for China and other emerging economies.

See Full Article

Members of the bank's 25-member governing council also debated whether current low levels of inflation in Europe could become chronic by being ingrained in wage and price agreements.

The concerns expressed in the summary of the Jan. 21 meeting could push the council to add to its current stimulus measures when it next meets to review policy on March 10. Europe's economy is recovering slowly with stronger domestic demand, but faces risks from a slowdown in global trade that could hurt exports.

The central bank could increase the size of its 60 billion euros ($67 billion) in monthly bond purchases, a step which drives down already low borrowing costs and pumps newly printed money into the economy. The ECB could also cut the rate on deposits that commercial banks store with the central bank even farther into negative territory, from minus 0.3 per cent. The negative rate is an unconventional step aimed at pushing banks to lend the money rather than hoard it.

In the summary, ECB members expressed concern that "global economic growth and global trade growth were decelerating in a context of heightened volatility in global financial and commodity markets and weaker global confidence.

"The environment had deteriorated in emerging market economies in particular."

They also debated whether current low inflation -- only 0.4 per cent annually -- was working its way into the setting of wages and prices by businesses and workers. That would make it even harder for the ECB to reach its goal of pushing inflation up toward its goal of just under 2 per cent, and would be another reason to enact more stimulus. Just under 2 per cent is considered healthiest for the economy.

In that context, members noted weaker than expected wage growth.

The no-names summary also related worries that slowing growth from China's rebalancing of its economy away from manufacturing and infrastructure construction toward consumer spending "could turn out to be more pronounced than expected and trigger a hard landing."

The concerns were similar to those expressed by the U.S. Federal Reserve at its January meeting, according to minutes released Wednesday.



Advertisements

Latest Economic News

  • Asian stocks tumble after Italy rejects constitutional changes

    Economic CTV News
    BEIJING - Asian shares tumbled Monday after Italian voters' rejected constitutional changes, raising questions over whether Italy will stay in the European Union and keep using the euro. KEEPING SCORE: Sydney's S&P-ASX 200 index dropped 1 per cent to 5,391.40 points and the Shanghai Composite Index lost 0.9 per cent to 3,215.30. Source
  • Euro tumbles after Italy's PM resigns, loses referendum

    Economic CBC News
    The euro tumbled in early Asian trade on Monday after Italian Prime Minister Matteo Renzi said he would resign after conceding defeat in a referendum over his plan to reform the constitution. The euro dropped 1.3 per cent to $1.0505 US, falling below its 1 1/2-year low of $1.0518 touched late last month, and testing its key support levels where the currency has managed to rebound in the past couple of years. Source
  • Company sold turf product after learning of defects: report

    Economic CTV News
    WOODBRIDGE, N.J. -- The country's leading maker of artificial sports turf sold more than 1,000 fields to towns, schools and teams nationwide after its executives knew they were falling apart faster than expected and might not live up to lofty marketing claims, according to an investigation by a news organization. Source
  • Montreal-based company sold turf product after learning of defects: report

    Economic CTV News
    WOODBRIDGE, N.J. -- The country's leading maker of artificial sports turf sold more than 1,000 fields to towns, schools and teams nationwide after its executives knew they were falling apart faster than expected and might not live up to lofty marketing claims, according to an investigation by a news organization. Source
  • U.S., China, EU, others fail to reach environmental goods deal

    Economic CTV News
    GENEVA -- Forty-six countries including the U.S., China and European Union nations failed Sunday to agree on a list of "environmental goods" like solar-powered air conditioners or LED light bulbs that could be targeted for lower tariffs. Source
  • Venezuela to issue new bills with current ones worth no more than 2 U.S. cents

    Economic CTV News
    BOGOTA -- Venezuela said it will issue higher-denominated bills as triple-digit inflation and a currency meltdown leave the country's largest note worth just around 2 U.S. cents on the black market. The central bank said in a statement Saturday that six new bills ranging from 500 to 20,000 Bolivars will begin circulating on Dec. Source
  • Six things to know about the bovine TB outbreak: CFIA's chief veterinary officer

    Economic CTV News
    OTTAWA -- More than 22,000 cattle at farms in Alberta and Saskatchewan are quarantined due to bovine tuberculosis, causing hardship for ranchers and millions in compensation payments and other costs. The Canadian Food Inspection Agency is testing cattle to determine the extent of the outbreak and the source of the contagious bacterial infection. Source
  • U.K.'s Boris Johnson downplays EU payment suggestions

    Economic CTV News
    LONDON -- Britain's foreign secretary has dismissed suggestions that London would be willing to pay into European Union coffers following an exit from the bloc, describing the idea as speculation. Boris Johnson's comments to the BBC on Sunday came after Britain's minister for leaving the European Union, David Davis, said that the country might be willing to pay in return for access to the single market. Source
  • Beyond the hippie stereotype: A closer look at the opposition to Trans Mountain

    Economic CBC News
    A conversation about tripling your money on a tech start up might seem out of place at an anti-pipeline march, but not so in Vancouver. When thousands of protestors made their way from City Hall to downtown a few weeks ago, chatter about stock options and where to go for ramen after the rally could be heard alongside the traditional indigenous drumming and chants of "Hey, hey, Trudeau, Kinder Morgan's got to go". Source
  • Using Air Miles for overseas flights? It may not be a great deal

    Economic CBC News
    You've saved your Air Miles for a well-deserved overseas adventure — but don't pack your bags just yet, as you may be in for a surprise. Seventeen million Canadians collect Air Miles reward points on everything from groceries to gas. Source