The resignation of Germany’s appointee to the board of
the European Central Bank Sabine Lautenschlaeger from ECB on Wednesday raised
concerns about ECB latest stimulus measures.
Three members were against the ECB’s decision on
September to restart bond purchases, including Bundesbank President Jens
Weidmann, in addition to governors from France and the Netherlands.
The ECB noticed in the bulletin for this month’s
policy meeting that the growth inside the European region remained (moderate)
in the first and the second quarters, while recent data showed a continuous
improvement in employment sector with "some moderation." The latest
economic indicators and surveys of "continuing downside risks"
confirmed the growth outlook.
"Core inflation measures remained generally
muted" although "wage growth remained strong," the ECB added.
The focus will be on more than 10 billion euros of tax
cuts. Policymakers say monetary facilities reach their limits in reviving the eurozone’s
slow economy, but Germany is at odds over the provision of fiscal stimulus even
though it is on the verge of recession.
Euro rebounds
The euro fell and euro area bond yields climbed
earlier on Thursday, but currently we are seeing some recovery.
The EURUSD rebounded from a low of 1.0922, the lowest
level since May 2017, where it is currently trading higher at 1.0965.
The U.S. dollar index erased its earlier gains after a
report confirming that annual growth in the world’s biggest economy slowed to 2
percent in the second quarter growth from 3.1 percent in the first three months
of 2019.
Bonds yields retreated after its rise earlier today on
optimism about the trade talks between the United States and Chinese side after
the U.S president remarks about it lowered the demand for the safe haven assets.
German 10-year bond
yield slipped 0.17 percent to -0.589 percent after hitting a high of -0.564 percent.
Italian bonds for the same maturity fell 0.12 percent to 0.834 percent.