Recent comments from ECB members, together with a reduction in its bank lending and halt to bond purchases, suggest that the Bank has maintained a tightening bias. It will probably keep open the option of buying more bonds and continuing to offer generous loans to commercial banks for the time being. And we hope that it might eventually take the plunge into full-blown quantitative easing as economic activity slows more sharply. For now, though, its unsupportive stance compared to that of other central banks will maintain upward pressure on the euro and poses a serious risk to the economic outlook.
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