In the monthly Economic Bulletin, ECB said ‘the resurgence in coronavirus (COVID-19) infections presents renewed challenges to public health and the growth prospects of the euro area and global economies… the associated intensification of containment measures is weighing on activity, constituting a clear deterioration in the near-term outlook.”
ECB also noted that “forward curve of the euro overnight index average (EONIA) shifted slightly downwards and remained mildly inverted”. The curve “does not suggest firm market expectations of an imminent rate cut”. Though, “long-term sovereign bond spreads declined steadily across euro area countries, amid expectations of further monetary policy and fiscal support.”
It’s also reiterated that new round of macroeconomic projections in December ” will allow a thorough reassessment of the economic outlook and the balance of risks”. On that basis, ECB will “recalibrate its instruments, as appropriate, to respond to the unfolding situation”.
