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The European Central Bank (ECB) decided to refrain from raising interest rates for the first time in 15 months on October 26, as data indicated a continued economic downturn in the European Union. The ECB maintained the benchmark interest rate at 4%, the highest level since the introduction of the euro currency in 1999, stating that the previous interest rate hikes continued to have a strong impact on financing conditions. The central bank also made announcements regarding the Pandemic Emergency Purchase Program (PEEP), stating that principal payments would be reinvested until the end of 2024.
<h2 id="unexpected-decision-from-the-ecb">Unexpected Decision from the ECB</h2>
In a period where data showed an increase in economic contraction in the European Union, the European Central Bank (ECB) decided to refrain from raising interest rates for the first time in 15 months on October 26. The ECB continued to keep the benchmark interest rate, which is denominated in the fiat currency Euro, at 4%, the highest level since its introduction in 1999. The statements made by the central bank included the following:
“It is expected that inflation will remain significantly high for a considerable period of time, and domestic price pressures will continue to remain strong. At the same time, inflation decreased significantly in September, and most of the underlying measures of inflation continued to ease.”
The decision to pause the interest rate hikes, following 10 consecutive increases, came after data showed a further decline in inflation and a sharp decrease in economic activity in the region. An October survey among companies operating in the manufacturing and service sectors in the Eurozone indicated a weakening demand and a sharp decline in production.
<img decoding="async" class="aligncenter wp-image-89573 size-full" src="https://coin-turk.com/wp-content/uploads/2020/05/abnin-750-milyar-euroluk-tesvik-paketi-btcyi-nasil-etkiler.jpg" alt="" width="1200" height="675">
<h2 id="pmi-data-indicates-recession">PMI Data Indicates Recession</h2>
According to the Purchasing Managers’ Index (PMI), companies made job cuts, indicating the first decrease in personnel since the Covid-19 quarantine period at the beginning of 2021. The index, which was 47.2 in September, fell to 46.5 in October, reaching the lowest level in the past 35 months. A value below 50 indicates a contraction in <a href="https://newslinker.co/category/finance/" data-wpel-link="exclude" rel="noopener noreferrer nofollow">market</a> conditions.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, who collaborated with S&amp;P Global to analyze PMI data, commented on these findings:
“Things are going from bad to worse in the Eurozone. We should not be caught unprepared to see a mild recession in the Eurozone in the second half of this year.”
The credit lending survey published by the ECB on October 24 revealed a sharp decrease in demand for business loans and mortgage loans in the third quarter of the year, surpassing the expectations of banks. The report also stated that banks continued to tighten credit standards across all categories of loans. Continue Reading: <a href="https://en.coin-turk.com/a-surprising-decision-from-the-european-central-bank/" data-wpel-link="internal" rel="noopener noreferrer nofollow">https://en.coin-turk.com/a-surprising-decision-from-the-european-central-bank/</a>

A Surprising Decision from the European Central Bank

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