Monetary Policies and Financial Markets
ECB
The ECB cut its depo rate to -0.40% and increased the pace of asset purchases to €80 billion per month. The programme was extended in December, although the pace of purchases will return to €60 billion from April 2017 onwards.
Long-term government bond yields
Long-term US and German government bond yields remained at low levels. The yield on the German 10-year bond moved into negative territory for the first time ever. Yields increased towards the end of the year on the back of Trump's victory, the prospect of the ECB tapering its asset purchases, and the expectation of a rate increase by the Fed, among other factors.
German and US 10-year government bond yields (%). Source: Reuters
- Germany
- USA (RHS)
Regulatory burden
The regulatory burden the banking business continued to be very onerous.
Financial markets
The start of the year was marked by significant financial market turbulence as oil prices sank to their lowest levels in more than a decade and uncertainty grew over the state of China and the world economy generally.
