Thursday, June 1, 2023
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HomeGlobal PulseEuropean Central Bank says it may cut interest rates to boost Eurozone’s...

European Central Bank says it may cut interest rates to boost Eurozone’s economy

African Union (AU) suspends Sudan’s membership over military crackdown on protesters. The AU’s decision was also endorsed by the European Union.

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ECB says it may restart its bond purchases as well

Amidst looming economic slowdown, Mario Draghi, the Chief of European Central Bank (ECB) — the central bank for Eurozone (where Euro is the currency) countries — has announced that ECB is preparing to cut interest rates and restart its bond purchases.

As the uncertainty over trade has heightened, the ECB is looking to adopt an expansionary monetary policy by lowering interest rates and going back to its unconventional methods of quantitative easing by purchasing bonds.

The ECB is set to facilitate quantitative easing of 2.6 trillion Euros. Draghi, however, said that banks’ efforts would have to be complemented by governments’ increase in fiscal spending.

Over the past few months, the Eurozone has consistently seen low inflation and growth.

Draghi is set to finish his term later this year. Over the years, especially during the 2010 liquidity crisis, Draghi has built the reputation of “doing what it takes” to rescue the economy.

Earlier this week, Chair of the US Federal Reserve Jay Powell had also announced he was prepared to cut rates should the global trade war begin to affect the US economy.

With countries like India also entering an expansionary monetary policy — it seems both the developed and the developing world are moving towards low interest rates.

Sudan’s suspension will remain until its ruling military council renounces power

In an unexpected move, the African Union suspended the membership of Sudan. This comes after Sudan’s ruling military council stormed a sit-in protest camp earlier this week, killing dozens of people.

The African Union (AU) said Sudan’s membership would remain suspended until the military gives up power and makes way for a civilian government. The AU’s decision was also endorsed by the European Union.

The AU is based in Ethiopia and the country’s Prime Minister Abiy Ahmed is trying to arrange mediation between the military council and the opposition.

The military has offered to negotiate with the opposition, but the latter refused to indulge in any dialogue with the military and demanded that it should immediately hand over power.

In other news:

UAE says ‘sophisticated’ tanker attacks likely the work of a state actor, Reuters 

Emmanuel Macron urges Donald Trump to stick with western allies, Financial Times 

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