The European Central Bank may have started experiencing setbacks brought about by the decline in the eurozone as revealed by the region's fourth-quarter results.
In Claire Jones' commentary for The Financial Times, the analyst said the bank is preparing to make a move to battle the potential problems that it will face if ever the European Central Bank gets dragged into the eurozone's slowdown.
European Central Bank president Mario Draghi reportedly "signaled that the bank will act if evidence of a prolonged slowdown in momentum continued to mount." Since growth in the eurozone is declining, the region's major banking provider is gearing up for bigger risks.
Financial analysts have started expressing concerns about the uncertainty of development within the eurozone. The region reported a growth rate of only 0.2 percent during the last quarter of 2018. Among others, Germany predicted that growth in 2019 will most likely be at only 1.0 percent.
Another problem that experts see as a threat to the European Central Bank's progress is the imminent British exit that has been looming over the European Union (EU). Prime Minister Theresa May's deal proposal has been historically rejected and a "no-deal" Brexit could further endanger the European economy.
Finally, Italy just announced over the weekend that the country has slipped back into recession. This is the third time in a decade that the country experienced an economic crisis. The government has proposed increased spending but the European Commission has warned against the consequences that this idea can bring. These include added debt.
The EU Commission's statistics bureau revealed that in more than four years, the recorded numbers are at the "lowest levels," further igniting fears about how the euro zone will deal with declines in multiple markets within individual countries.
Seeking Alpha noted that opposing groups in Europe have pointed out some fiscal policies that the government has to revamp. For the opposition and dissatisfied entities, European governments need to establish more aggressive strategies that will encourage growth in the economy.
Last week, Draghi's comments appear to have downgraded compared to his previous statements that there was a balance between "better and worse outcomes" in the eurozone.
According to ABC News, Draghi confirmed that European countries using the euro as their currency "moved to the downside." This somehow pessimistic insight sparked debates on whether or not the bank's interest rates will see a hike either later this year or sometime in 2020. Draghi noted that the bank is still analyzing the situation at this point.
