Focus on Financial Conditions May Mean ECB TLTRO Tweak

(Bloomberg) -- European Central Bank President Christine Lagarde has presided over an unprecedented flood of monetary stimulus in the euro area and, as a consequence, conditions in financial markets have never been looser. With banks failing to pass on low borrowing costs in full, the supply of and demand for credit have taken a hit. The central bank’s targeted longer-term refinancing operations probably are its best tool for incentivizing banks to lend, and the Governing Council may be forced to increasingly focus on them, especially if demand remains weak as the recovery advances, according to Bloomberg Economics.

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