The European Central Bank’s monetary stimulus offer aimed at shoring up the eurozone’s struggling economy through cheap loans has received a lukewarm response from banks as data released Thursday showed demand falling short of analysts’ forecasts.
The Frankfurt-based central bank said it lent 82.6 billion euros (106.5 billion dollars) over four years to 255 banks under its Targeted Long-Term Refinancing Operation, which is aimed boosting liquidity in the eurozone financial system.
Analysts had expected the uptake from the first batch of loans under the 400-billion-euro programme to come in at about 150 billion euros.
The disappointing uptake triggered analyst speculation that the central bank will need to take new monetary action to ensure the 18-member currency bloc remains on a path towards growth.
“The eurozone monetary authorities will have to show they are open next year to more monetary policy measures,” said Thomas Gitzel, chief economist at Liechtenstein-based VP Bank.
The loan programme formed part of a multipronged approach by the central bank to break up bottlenecks in bank lending. The plan also included two cuts in the central bank’s benchmark refinancing rates, which have taken borrowing costs down to a historic lows.
The loans to banks are due to run until September 2018 and are set with historically low interest rates.
The second round of the total of eight allotments of loans is due to be rolled out December 11.
GNA
