European Central Bank chief Mario Draghi has said the bank will “review and possibly reconsider” monetary policy at its next meeting in March.
He said eurozone rates would “stay at present or lower levels for an extended period” and there would be “no limits” to action to reflate the eurozone.
His comments followed the ECB’s regular meeting, where it kept the bank’s benchmark rate unchanged at 0.05%.
The overnight deposit rate was also left unchanged at -0.3%.
At the ECB meeting in December, this rate had been cut from -0.2% in an attempt to push banks to lend instead of parking money at the ECB.
In December, the ECB had also extended its €60bn-a-month stimulus programme by six months to March 2017.
Eurozone inflation is currently running at 0.2%, way below the ECB’s target of near 2%.
“We have the power, willingness and determination to act. There are no limits how far we are willing to deploy our policy instruments,” Mr Draghi said.
Howard Archer, chief UK and European economist at IHS Global Insight, said “the stimulus trigger looks cocked and ready to pull as soon as the March ECB meeting”.
Mr Draghi told a news conference: “As we start the new year, downside risks have increased again amid heightened uncertainty about emerging market economies’ growth prospects, volatility in financial and commodity markets and geopolitical risks.”
He said that could make it necessary to review – and possibly reconsider – monetary policy at the next meeting in early March.
Mario Draghi most definitely doesn’t do panic. In fact, his demeanour in the news conference after the ECB’s governing council meeting didn’t even suggest mild anxiety. Still, his words made it plain that he and his policy-making colleagues have been watching the new year’s financial market gyrations very warily.
It’s not the ECB’s job to stabilise stock markets. The Bank’s job is to keep inflation in check, but it is currently too low: 0.2% compared with the ECB’s target of below, but close to, 2%.
The financial market turbulence, especially the fall in oil prices is one reason why, as Mr Draghi said, “inflation dynamics continue to be weaker than expected”. He told us the ECB will review policy at its next meeting in March. There is a strong chance of more action, probably extra quantitative easing, to stimulate inflation a bit more (yes really).
That meeting will have a new set of ECB macroeconomic projections to work with.
He said that the recent falls in the oil price meant that inflation was likely to be “significantly lower” compared with the outlook in early December.
Eurozone inflation was below zero – that is, prices were falling – as recently as September, mainly due to falls in international energy prices, particularly crude oil.
In December, Mr Draghi said that eurozone inflation was expected to reach 1% in 2016. However, the ECB’s forecasts were based on the assumption of oil prices averaging more than $50 a barrel this year, and oil is currently below $30.
Mr Draghi’s latest comments were seen as helping to calm stock markets, with shares in Europe rising as his news conference was under way.
His comments also weakened the euro, which briefly fell below $1.08 against the dollar before regaining ground.
“ECB president Draghi once again saw the equity markets confirm his ‘super’ status as they jumped almost as soon as he started his speech,” said Alastair McCaig, market analyst at IG.
“The emphasis shifted from ‘whatever it takes’ to ‘no limits’ where action is concerned, with the small caveat that nothing will happen until they have had their March meeting.”
COVID-19 Vaccine: Crude Oil Extends Gain to $48 Per Barrel on Wednesday
Oil prices rose further on Wednesday as hope for an effective COVID-19 vaccine and the news that the United States of America’s President-elect, Joe Biden has begun transition to the White House bolstered crude oil demand.
Brent crude oil, a Nigerian type of oil, gained 1.63 percent or 78 cents to $48.64 per barrel at 11:50 am Nigerian time on Wednesday.
The United States West Texas Intermediate (WTI) crude oil rose by 1.36 percent or 61 cents to $45.52 per barrel.
OPEC Basket surged the most in terms of gain, adding 3.16 percent or $1.37 to $44.75 per barrel.
This was after AstraZeneca, Moderna and Pfizer-BioNTech announced the positive results of their trials.
Moderna and Pfizer had claimed over 90 percent effective rate in trials while AstraZeneca said its COVID-19 vaccine was 70 percent effective in trials but could hit 90 percent going forward.
“The possibility of having a vaccine next year increases the odds that we’re going to see demand return in the new year,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Also, the decision of President-elect Joe Biden to bring Janet Yellen, the former Chair of Federal Reserve, back as a Treasury Secretary of the United States is fueling demand and strong confidence across global financial markets.
“President-elect Biden’s cabinet choices, particularly Janet Yellen’s Treasury Secretary position, are adding to upside momentum across a broad space of asset classes,” said Jim Ritterbusch of Ritterbusch and Associates.
Seyi Makinde Proposes N266.6 Billion Budget for Oyo State in 2021
The Executive Governor of Oyo State, Seyi Makinde, has presented the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly on Monday.
The proposed budget titled “Budget of Continued Consolidation” was said to be prepared with input from stakeholders in all seven geopolitical zones of Oyo state.
Governor Makinde disclosed this via his official Twitter handle @seyiamakinde.
According to the governor, the proposed recurrent expenditure stood at N136,262,990,009.41 while the proposed capital expenditure was N130,381,283,295.63. Bringing the total proposed budget to N266,6444,273,305.04.
The administration aimed to implement at least 70 percent of the proposed budget if approved.
He said “The total budgeted sum is ₦266,644,273,305.04. The Recurrent Expenditure is ₦136,262,990,009.41 while the Capital Expenditure is ₦130,381,283,295.63. We are again, aiming for at least 70% implementation of the budget.”
He added that “It was my honour to present the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly, today. This Budget of Continued Consolidation was prepared with input from stakeholders in all seven geopolitical zones of our state.”
World Bank Expects Nigeria’s Per Capita Income to Dip to 40 Years Low in 2020
The World Bank has raised concern about Nigeria’s rising debt service cost, saying it could incapacitate the nation from necessary infrastructure development and growth.
The multilateral financial institution said the nation’s per capita income could plunge to 40 years low in 2020.
According to Mr. Shubham Chaudhuri, Country Director for World Bank in Nigeria, the decline in global oil prices had impacted government finances, remittances from the diaspora and the balance of payments.
Chaudhuri, who spoke during the 26th Nigerian Economic Summit organised by the Nigerian Economic Summit Group and the Federal Government, said while the nation’s debt is between 20 to 30 percent, rising debt service remains the bane of its numerous financial issues and growth.
“Nigeria’s problem is that the debt service takes a big part of the government revenue,” he said.
He said, “Crisis like this is often what it takes to bring a nation together to have that consensus within the political, business, government, military, civil society to say, ‘We have to do something that departs from business as usual.’
“And for Nigeria, this is a critical juncture. With the contraction in GDP that could happen this year, Nigeria’s per capita income could be around what it was in 1980 – four decades ago.”
Nigeria’s per capita income stood at $847.40 in 1980, according to data from the World Bank. It rose to $3,222.69 in 2014 before falling to $2,229.9 in 2019.
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