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The European Central Bank is putting all the pieces in place for new support for the economy as policy makers debate how quickly they need to act in response.
Forecast downgrades are set to justify a new round of funding for banks, according to people familiar with the matter. Staff have been working on the design of the loans, and the question is whether the Governing Council will unveil all details on Thursday or wait until April. Given the changed economic backdrop, there’ll also be a focus on policy makers’ language on interest rates.
The decision will be announced at 1:45 p.m. in Frankfurt, and President Mario Draghi will face reporters at his regular press conference 45 minutes later.
New Loans for Banks
Draghi’s top lieutenants, chief economist Peter Praet and markets head Benoit Coeure, have set up the meeting for a discussion about new longer-term loans for banks. Euro-area lenders, roughly half of them in Italy and Spain, already hold more than 700 billion euros ($793 billion) in so-called TLTROs, and may look to replace them from this summer.
Without new funds, the risk is that banks will curtail access to credit and worsen the slowdown.