Another difficult day in Frankfurt, where it meets today the Governing Council of the European Central Bank, which will communicate its decisions on monetary policy in the early afternoon. Most analysts do not expect any change in interest rates, which are currently stuck at an all-time low of 1%. The institute has not sent signals that could predict further reductions in the cost of money, but the market wants a further reduction to 0,75%. The update on the economic-financial forecasts of the Eurotower technicians is also expected for today.
There is also talk of a possible third auction of maxi subsidized loans to banks (Ltro), with a three-year maturity and 1% interest, even if the hypothesis has been denied several times in recent months by Frankfurt. Stop instead ithe program of calming direct purchases of government bonds under stress (SMP), which in the past had created strong tensions within the directorate. There shouldn't be any significant news on this front either.
However, the ECB has received requests from many quarters. There Spain went so far as to ask for the bond purchase program to be reactivated, while the International Monetary Fund and the OECD – in addition to the recovery of the SMP – they have suggested cutting interest rates. There European Court of Auditors, in its annual report on the work of the ECB, recommended that the institution have a single head of risk management and improve the dissemination of related information. Eurotower responded by claiming the adequacy of its risk management structure.
Central bankers will face a macroeconomic framework which offers few hints of optimism. In addition to the tensions on the markets, yesterday a concrete indicator such as that on retail sales signaled a heavier contraction than expected in April, with -1% which reflects the weakness of household consumption. The business surveys they then confirmed in May a worsening of the recessionary picture, to the weakest values for three years. There unemployment, on the other hand, a new all-time high of 11 per cent has arrived in the euro area.
