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.”
No Plan to Increase Fuel Price; Says FG
The Federal Government has stated that it has no plan to increase fuel price during the yuletide period.
This assurance is coming amid the nationwide fuel scarcity which has pushed the price of petrol above N250 in many retail stations.
Investors King learnt that fuel is being held for N250 per litre in Abuja and several other cities across the country while black marketers are charging between N400 and N450 per litre.
The scarcity and the high price of fuel are however becoming unbearable for many Nigerians, especially those who have reasons to embark on business travel for the December festivals.
According to the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Ukadike Chinedu, most of the association members, who owned the bulk of the filling stations across the country, were now subjected to purchasing PMS at about N220/litre, which was why many outlets currently dispensed at about N250/litre and above.
He noted that the cost of the commodity has been on the rise due to its unavailability and other concerns in the sector.
He added that the price of fuel could be sold from N350/litre to N400/litre before the end of the year.
Meanwhile, a number of senior officials at the NNPC had stated that the subsidy was becoming too burdensome on the national oil company, as this was another reason for the scarcity of PMS.
According to a source who is familiar with the development as reported by Punch News, “How can we continue to import 60 million litres of petrol daily and keep subsidising it, while millions of litres are either diverted or cannot be accounted for? The burden is too much, as you rightly captured in that story”.
Investors King understands that NNPC is the sole importer of petroleum into the country and it pays billions of naira every month to subsidise the product to N147 per litre.
Reuters News reported that in August 2022, NNPC paid more than $1 billion as fuel subsidy while the federal government earmarked N3.6 trillion as fuel subsidy in the 2023 budget proposal.
Fuel Scarcity: NNPC Declares 2billion Liters in Stock, Blames Scarcity on Road Construction
NNPC Claimed it as 2 billion litres of fuel despite scarcity
The Nigerian National Petroleum Company (NNPC) has blamed the recent fuel scarcity on road construction around Apapa, noting that the corporation has about 2 billion litres of fuel in stock.
According to a statement issued by NNPC Executive Vice President, Downstream, Mr Adeyemi Adetunji, the Nigeria National Petroleum Company has about 2 billion litres of fuel which can last the country conveniently for more than 30 days.
The Executive Vice President further blamed the queues on the road construction around Apapa axis which has slowed down the movement of oil trucks to several parts of the country.
“The recent queues in Lagos are largely due to ongoing road infrastructure projects around Apapa and access road challenges in Lagos” he said.
He however noted that more filling stations should have Premium Motor Spirit (PMS) otherwise known as petrol with the ease in gridlock along the apapa axis.
“The gridlock is easing out and NNPC Ltd has programmed vessels and trucks to unconstrained depots and massive load outs from depots to states are closely monitored,” he said.
Investors King gathered that several states including Abuja have been impacted by the supply chain difficulty caused by the construction around Apapa.
The scarcity of fuel has therefore led to the hike in price. In most places across the country, fuel is sold as high as N250 per litre. Several fuel stations are already taking advantage of the situation coupled with the increase in the movement of people and goods owing to the December festivals.
Speaking further, Adeyemi noted that the situation will soon be back to normalcy as NNPC is taking measures to address the situation.
“We want to reassure Nigerians that NNPC has sufficient products and we significantly increased product loading in selected depots and extended hours at strategic stations to ensure sufficiency nationwide.
“We are also working with industry stakeholders to ensure normalcy is returned as soon as possible,” he concluded.
Global Growth to Drop Below 2% in 2023, Says Citi
Citigroup on Wednesday forecast global growth to slow to below 2% next year, echoing similar projections by major financial institutions such as Goldman Sachs, Barclays, and J.P. Morgan.
Strategists at the brokerage cited continued challenges from the COVID-19 pandemic and the Russia-Ukraine war — which skyrocketed inflation to decades-high levels and triggered aggressive policy tightening — as reasons behind the outlook.
“We see global performance as likely (being) plagued by ‘rolling’ country-level recessions through the year ahead,” said Citi strategists, led by Nathan Sheets.
While the Wall-Street investment bank expects the U.S. economy to grow 1.9% this year, it is seen more than halving to 0.7% in 2023.
It expects year-on-year U.S. inflation at 4.8% next year, with the U.S. Federal Reserve’s terminal rate seen between 5.25% and 5.5%.
Among other geographies, Citi sees the UK and euro area falling into recession by the end of this year, as both economies face the heat of energy constraints on supply and demand front, along with tighter monetary and fiscal policies.
For 2023, Citi projects UK and euro area to contract 1.5% and 0.4%, respectively.
In China, the brokerage expects the government to soften its zero-COVID policy, which is seen driving a 5.6% growth in gross domestic product next year.
Emerging markets, meanwhile, are seen growing 3.7%, with India’s 5.7% growth — slower than this year’s 6.7% prediction — seen leading among major economies.
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