E.C.B. Says It Is Ready to Restart Economic Stimulus Measures

Frankfurt — The European Central Bank on Thursday set the stage for a renewed attempt to improve the eurozone’s sagging economy, saying it was considering reviving a program meant to pump money into the region’s financial system.

“The Governing Council is determined to act” if inflation remains stubbornly below the official target of 2 percent, the bank’s policymaking panel said. Committees have begun studying potential stimulus measures that include restarting purchases of government and corporate bonds, a form of printing money known as quantitative easing, the statement added.

The move was a sharp reversal, coming only half a year after the bank began winding down an earlier bond-purchasing program. An increasing number of indicators are warning that the eurozone and global economies are losing momentum, prompting central bankers around the world to react. In the United States, the Federal Reserve is expected to cut interest rates when it meets next week.

Signs are accumulating that the eurozone is in danger of slipping into recession. On Thursday, a closely watched survey of business optimism in Germany suffered its biggest drop since early 2009. Germany has the eurozone’s largest economy and sets the tone for the region. Optimism among German manufacturers “is in free-fall,” the Ifo Institute in Munich, which conducted the survey, said in a statement.

The central bank still considers the risk of recession to be “pretty low,” Mario Draghi, the president of the European Central Bank, said at a news conference in Frankfurt. But he also listed numerous threats looming over the global economy, including trade war, slower growth in China and the possibility that Britain will leave the European Union without a treaty, a so-called hard Brexit.

And he expressed frustration that inflation in the eurozone’s 19 countries, which is rising at an annual rate of 1.3 percent, refuses to reach the 2 percent considered optimal for growth. “We don’t like what we see on the inflation front,” Mr. Draghi said.

The European Central Bank had been widely expected to deploy measures to counteract the slowdown after Mr. Draghi all but promised action in statements he made in June. Analysts and economists now expect the central bank’s Governing Council to announce a cut in interest rates or a resumption of bond purchases, or both, when it meets on Sept. 12.

The central bank “is clearly preparing markets for a rate cut and probably even more at the September meeting,” Carsten Brzeski, chief economist ING Bank in Germany, said in a note to clients.

But there is widespread fear that central banks won’t be able to continue propping up the world’s economies in the same way they did during the crises of years past. There is simply not much more they can do, analysts say.

The European Central Bank’s benchmark interest rate, the rate it charges commercial banks to borrow cash, is already zero. There is still room for the bank to cut the so-called deposit rate, the rate commercial banks pay to deposit money at the central bank. The deposit rate is already minus 0.4 percent, in effect a penalty that prods banks to lend money rather than to hoard it at the central bank.

The negative rate also serves as a benchmark for the bond market, helping to drag down the interest that consumers ultimately pay on mortgages or car loans. The yield on 10-year German government bonds, considered the safest investment in Europe, has dipped below minus 0.4 percent. In effect, investors are willing to pay the German government to keep their money safe.

But analysts say that the deposit rate cannot go much lower without distorting money markets. And the central bank does not have that much room to buy more government and corporate bonds, another method of pushing down market interest rates. The European Central Bank already owns a huge chunk of the bond market as a result of its earlier stimulus programs.

By signaling action early, the central bank may be trying to get maximum impact from the tools it has left. Like firefighters running out of water, the bank’s policymakers are better off using what they have before the blaze gets even bigger.

Action now also effectively locks in policy well after Mr. Draghi’s term expires at the end of October. His successor, Christine Lagarde, the managing director of the International Monetary Fund, will not have much room to maneuver for her first year in office.

Ms. Lagarde, however, is seen as a supporter of Mr. Draghi’s approach to monetary policy. Financial markets will take comfort in knowing that the central bank will continue to do what it can to avoid recession even after Mr. Draghi leaves.

The European Central Bank’s Governing Council said Thursday that it had no objection to Ms. Lagarde’s appointment by European political leaders. Ms. Lagarde is “a person of recognized standing and professional experience in monetary or banking matters,” the council said in a statement.

Mr. Draghi was more effusive, saying Ms. Lagarde will be “an outstanding president of the E.C.B.” and implicitly defending her against criticism that she lacks central banking experience. As director of the I.M.F., Ms. Lagarde made decisions in consultation with members of the organization and staff economists. “It isn’t much different than the E.C.B.,” Mr. Draghi said.

The council does not have the power to block Ms. Lagarde’s appointment, but its opinion carries significant weight.

Mr. Draghi has been mentioned as a potential successor to Ms. Lagarde at the I.M.F., but he ruled that out Thursday. “I’m not available,” he said.

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