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HSBC believes that ECB will cut rates and extend QE

In a report on the European Central Bank (ECB), the HSBC bank has dissected the bank’s agenda, with an inflation rise one of the biggest priorities. HSBC believe that the markets doubt the willingness of the ECB to tackle the inflation problem, of reaching the desired 2% threshold. Also, the euro area is unresponsive to economic slack, and therefore recovery.
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Risks from outside euro area rise, Financial Stability Review shows

The euro area financial system has been resilient through occasional bouts of financial market volatility in the second half of the year, according to the ECB’s latest Financial Stability Review. The twice-yearly report highlights that the likelihood of an abrupt rise in global risk premia has become more pronounced as concern shifts to emerging market economies. The review finds that measures of systemic stress remained contained amid periods of stress related to turbulence during the summer in Greece, followed by a sizeable correction in Chinese asset prices.  Read more...

ECB announces Finance Week Initiatives

European Central Bank (ECB) executive board member Yves Mersch has outlined two major initiatives that will discussed at Euro Finance Week in Frankfurt. In a keynote speech, Mersch said that the capital markets union (CMU) will boost private risk-sharing across borders, making public risk-sharing less necessary and giving greater protection to taxpayers. The ECB and the Eurosystem has fully welcomed the action plan on the CMU published in September.
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Draghi hints asset purchase extension

The euro weakened after European Central Bank President Mario Draghi said economic risks to the currency bloc are “clearly visible” and that policy makers’ asset purchase plan will be extended if needed to reach their inflation goal.
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