Rate Hike Pushed Back, ECB to Provide Funding

The European Central Bank (ECB) recently announced that programs stimulating the growth of lending in the eurozone are slated to commence come September. These targeted longer-term refinancing operations (TLTRO-III) aims to provide affordable rates and lending options for banks covered by the eurozone. In line with these plans, the ECB has planned to keep the interest rates the same.

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Stopped in Its Tracks?

According to CNBC, the European Central Bank has long kept the interest rates of the eurozone unchanged, with the aim to stimulate the growth and lending industry whilst boosting the economic inflation. While there have been plans for a rate hike, the ECB announced that the present interest rates observed by banks will remain unchanged for the remainder of 2019.

Following this decision, Reuters reports that the prices on Treasury bonds rose after the ECB delayed the supposed interest rate hike.

Source of New Funding

To help worsen the economic standing of the European Union, Bloomberg reports that the European Central Bank offered banks a chance to get a fresh round of funding. However, many credit investors remain disappointed with the recent turn of events, indicating that the “slowdown is real and possibly more serious than people thought,” states Johannes Mueller in an interview with Bloomberg.

According to these interviews, while funding will be given to banks in the eurozone, these TLTROs might be costlier. With deposit interest rates now at the negative percentile, banks will have to regulate their lending policies and procedures, notes Bloomberg.