ECB to hunker down as eurozone outlook worsens

FRANKFURT AM MAIN (AFP) – Analysts expect the European Central Bank (ECB) to acknowledge growing risks to the eurozone economy tomorrow while sticking to its patient course, kicking off a year that could see the Frankfurt institution mostly marking time.

The central bank is caught at an intermediate stage of withdrawing crisis-era stimulus, having wound up net purchases of government and corporate bonds – so-called “quantitative easing” (QE) – but seeing the economy still too fragile to lift interest rates from their historic lows.

Policymakers agreed in December to end QE after pumping a total of EUR2.6 trillion (USD3 trillion) into the financial system.

The scheme aimed to power lending to the real economy of businesses and households, lifting economic growth and boosting inflation towards the ECB target of just below two per cent.