ECB Running Out of Policy Tools

The European Central Bank (ECB) surprised many in the markets on Thursday by cutting its main interest rates to a record low of 0.25 percent in an attempt to help kickstart the euro zone economy.
But what’s left in President Mario Draghi’s arsenal if the bank needs to unleash further accommodative steps after this week’s cut?

“We are doubtful that the ECB can still offer many of these big-bang days in the future,” Carsten Brzeski, a senior economist at ING said in a research note on Thursday.

The policy move has increased the ECB’s reputation as the euro zone’s “pro-active firefighter”, he said, but the cut will hit the ECB’s predictability and make future forward guidance and market expectation management more complicated, he added.

via CNBC

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