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The European Central Bank, which has carved out a huge stimulus package to boost recovery for its 19 member countries amid the Covid 19 pandemic, is expected to continue with the support till at least early next year.</p>
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&ldquo;Preserving favorable financing conditions over the pandemic period remains essential to reduce uncertainty and bolster confidence, thereby underpinning economic activity and safeguarding medium-term price stability,&rdquo; ECB President Lagarde said at a press conference in April.</p>
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An AP report said that &ldquo;any talk of a stimulus taper could mean higher borrowing costs for companies &mdash; the last thing the ECB wants right now.&rdquo;</p>
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As part of the Euro 1.8 trillion stimulus package, the ECB has been purchasing government and corporate bonds. This is the largest stimulus package ever financed in Europe.</p>
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&ldquo;Any hint, however, that the ECB is thinking about tapering the purchases could send market rates higher earlier than the central bankers would like. That&#39;s why any discussion could be postponed until the bank&#39;s Sept. 9 meeting or later,&rdquo; the AP report said.</p>
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Even as several European economies have started showing signs of recovery, tapering stimulus will pose a challenge.</p>
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&ldquo;She faces a balancing act: acknowledging improving economic data without triggering a premature market reaction that anticipates the eventual reduction in central bank support for the economy,&rdquo; the report said.</p>
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