Page 26 - AHATA

A9
WORLD NEWS Friday 13 March 2020
European Central Bank deploys stimulus to ease virus damage

By DAVID McHUGH ued to slide after the ECB's The move comes as the
AP Business Writer announcements, with the eurozone is forecast to slide
FRANKFURT, Germany (AP) Stoxx Europe 600 index into recession and financial
— The European Central falling 11.5% - its worst day markets keep falling over
Bank deployed targeted ever - amid global con- concerns about the virus
new stimulus measures to cerns that authorities can outbreak's hit to the econ-
cushion the shock to the do little to ease the dam- omy. Concerns deepened
economy from the virus age wrought by the virus after the U.S. decided to
outbreak, but its presi- outbreak halt travel from 26 Europe-
dent said monetary policy Holger Schmieding, chief an countries.
couldn't do it alone and economist at Berenberg The bank's policy meeting
called for a "decisive and bank, said that "the ad- was held without several
determined" response from verse market reaction members of the 25-seat
governments. may not be just a market governing council physical-
ECB President Christine La- verdict on the ECB's pack- ly present and participating
garde said the economy age... It could also reflect by remote conferencing.
was facing a "major shock" a growing realization that Italian central bank head President of European Central Bank Christine Lagarde looks
and that the central bank monetary and fiscal policy Ignazio Visco was among up prior to a press conference following a meeting of the ECB
governing council in Frankfurt, Germany, Thursday, March 12,
measures unveiled Thurs- cannot be the genuine cir- them since his country, so 2020.
day were "almost surgical- cuit breakers in a medical far the hardest hit in Europe Associated Press
ly" targeted at areas where emergency. " by the virus outbreak, has
monetary policy could Schmieding said Lagarde restricted movement. effects of business interrup- Italy is earmarking 25 billion
help. committed a "communica- Economists are saying that tion. More abundant and euros ($28 billion) in new
The central bank, she said, tions mishap" with a remark the impact of the virus targeted credit could help spending and Britain said
was "determined to sup- that it was not the ECB's outbreak is difficult to ad- businesses get through a it would make 30 billion
port households and firms business to hold down gaps dress with monetary policy, period of interruption with- pounds ($39 billion) avail-
in the face of the current in borrowing costs among since it first and foremost out going out of business. able.
economic disruptions and eurozone member govern- deals a shock to the sup- The Bank of England cut its The government of Chan-
heightened uncertainty." ments. The gaps, or sover- ply of goods and services. key benchmark to 0.25% cellor Angela Merkel has
But she added that a stron- eign spread, increased in Monetary policy is bet- from 0.75% on Wednesday; decided to make it easing
ger response from euro- response and Lagarde lat- ter equipped to stimulate the U.S. Federal Reserve for companies to put work-
zone governments was ur- er made what appeared demand, not supply, by cut its benchmark by a ers on shorter hours, with
gently needed to prevent to be a clarifying remark making credit more widely half-percentage point to government assistance.
the eurozone from falling that high spreads "clearly available. 1.0-1.25% on March 3. That could help firms re-
into recession: "An ambi- impair" the bank's mone- Central bank action is Governments have an- bound after the outbreak
tious and coordinated fis- tary policy. aimed instead at limiting nounced some limited passes because they will
cal policy response is re- The European Central Bank the damage from knock-on measures of fiscal support. have avoided layoffs.q
quired to support business- said it was also providing
es and workers at risk." She more cheap, long-term
said action should come loans to banks to make
"in the next few weeks and sure they have the liquid-
not months." ity they need. And the ECB
She repeated the phrase at will temporarily ease some
the start of her statement, capital requirements for
and when asked if the eu- banks to help them keep
rozone faced a recession, lending. It's all aimed at
said that depended "on helping businesses get the
the speed, the strength of financing they need and
the collective approach" stimulating activity to off-
by all players. She said cur- set the downturn from all
rently announced fiscal the closings and restrictions
measures were only 27 bil- due to the virus outbreak.
lion euros, or about a quar- The central bank did not
ter of one percent of GDP. cut interest rates as many
The bank's 25-member analysts had expected.
governing council decided Rates are already low
a stimulus package that in- and economists have said
cluded the purchase of up deeper cuts might not help
to 120 billion euros ($132 much.
billion) more in bonds this Thursday's steps "will do
year. no more than cushion the
The money is newly cre- blow to the economy from
ated and injected into the the coronavirus," said An-
financial system. It comes drew Kenningham, chief
on top of purchases worth Europe economist at Capi-
20 billion euros a month it is tal Economics. "Monetary
already carrying out, and policy is powerless to pre-
would be aimed at corpo- vent a deep downturn
rate bonds, which should and, unlike in the U.S. and
help keep credit available China, it has little scope to
to companies. support the recovery after-
Financial markets contin- wards."