European Central Bank provides another shot of stimulus as economy suffocates

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European Central Bank provides another shot of stimulus as economy suffocates

On Thursday, the ECB (European Central Bank) had approved a larger-than-anticipated expansion of its stimulus package in a bid to revive the bloc’s economy which has been reeling from the pandemic’s financial fallout.

Besides, as the eurozone economy has been facing off its worst recession on record since the World War II, only weeks after a slew of crisis measures, the European Central Bank had again expanded its money-printing program aimed at cushioning a likely 12 per cent contraction in eurozone economy this year.

On top of that, latest boost from the European Central Bank came as a number of Eurozone economies had been spending record amounts in order to preserve small-scale businesses and jobs amid pandemic-led restrictions. Besides, following Thursday’s emergency meet of ECB policymakers, the European Central Bank had approved an expansion of its emergency bond repurchase scheme up to mid-2021 and heightened up the amount by roughly €600 billion to €1.35 trillion, which in effect should be able to enable the eurozone’s largest lender to buy back most of the new debts the bloc’s Governments’ were issuing in order to overcome the pandemic-driven economic slump.

Market rallies after ECB stimulus

Meanwhile, as the money markets were ramped up followed by the ECB decision to unveil a larger-than-anticipated stimulus package which would be able to buy back all of the debts issued by the bloc’s Governments to see through the pandemic outbreak, ECB President & former IMF Chief, Christine Lagarde said followed by the announcement, “The euro area economy is experiencing an unprecedented contraction.

There has been an abrupt drop-in economic activity as a result of the coronavirus pandemic and the measures taken to contain it. ” In tandem, as Lagarde was quoted saying that the worst-case scenario could shrink the eurozone economy up to 12.6 per cent this year, voicing optimism over another large-scale bond buyback package by September this year, a strategist at Pictet Wealth Management, Frederik Ducrozet said late on the day, “We would expect a decision to increase the Pandemic Emergency Purchase Programme envelope by 500 billion euros to 1.85 trillion euros to be made in September. We suspect that a fragile recovery will require steady interventions for some time.