“Most members of the committee expect monetary policy to be loosened in August,” officials said, according to the minutes of their July 13 meeting. “The committee discussed various easing options and combinations thereof. The exact extent of any additional stimulus measures will be based on the committee’s updated forecast, and their composition will take account of any interactions with the financial system.”
Related: Europe ETFs Are Cheap Long-Term Buys
Market observers have warned that the ongoing monetary polices and depressed rates would weigh on banks’ bottom line as firms would find it hard to make money with a flat yield curve – banks borrow short-term and lend long-term. However, European growth is picking up, which could trigger greater demand for loans.
“In Europe they are practicing a policy you would not see unless they were in the midst of a global depression, and the data say anything but that,” Jim Paulsen, an economist and strategist at Wells Capital Management, told MarketWatch. “I really think that people are underestimating growth pretty much around the world. We are going into a period where it is heading north, not south.”
iShares MSCI Europe Financials ETF