Brexit Update: ECB Likely to Delay Stimulus

July 20th, 2016

ECB Likely to Delay Stimulus

Last week, Bank of England (BOE) Governor Mark Carney announced that the United Kingdom (UK) would refrain from enacting emerging fiscal measures following the aftermath of the June 23rd referendum. The BOE declined to cut interest rates or issue an emergency budget. The markets responded positively to the vote of confidence from the central bank, giving the British Pound a much-needed boost.  Despite the hesitation this month, the BOE is expected to pursue stimulus measures in August.

Mario Draghi, President of the European Central Bank (ECB) is expected to follow suit this Thursday, July 21, 2016. The ECB Governing Council meets in Frankfurt on Thursday, after which Draghi will address the media in a press conference. Analysts predict the ECB will delay boosting stimulus. A Bloomberg survey found that 60 percent of economists surveyed anticipate new stimulus measures will be adopted at the central bank’s meeting on September 8th.  An overwhelming 97 percent of economists surveyed expect the ECB will extend its bond-buying program past the existing timeline ending in March 2017. While these positions may calm markets initially, they only serve to kick inevitable stimulus down the road for a month or two.

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Brexit Update

Exchange Rates

£1 GBP = $1.32 USD

€1 EUR = $1.10 USD

£1 GBP = €1.20 EUR

(as of 7:00 AM EST, 7/20/2016)

 

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