Finance markets wait to see clues of next ECB move: analysts

By Simon Morgan, AFP

FRANKFURT — Financial markets are waiting to see whether the European Central Bank (ECB) is ready to step up action to end the debt crisis after a recent series of unprecedented measures, analysts said. The ECB’s governing council convenes for its regular monthly policy-setting meeting on Wednesday, a day earlier than normal owing to the Easter holidays. It is not expected to announce any changes in interest rates — currently on hold at the historically low level of 1 percent.

But ECB watchers are keen to hear whether president Mario Draghi has any further cards up his sleeve to bring the long-running sovereign debt crisis to an end, or whether the bank is now drawing up a so-called “exit strategy” to wind down the raft of recent exceptional policy measures. The ECB was quick to take on a fire-fighting role from the very beginning of the crisis. It quickly reversed last year’s rate hikes to bring eurozone borrowing costs back down to an all-time low of 1 percent and embarked on a hotly contested program of buying up the bonds of debt-mired countries.

Most recently, in two so-called long-term refinancing operations (LTROs) in December and February, it pumped more than 1 trillion euros (US$1.3 trillion) into the banking system in a bid to avert a dangerous credit squeeze in the 17 countries that share the euro.