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Illustration: Aïda Amer/Axios

The European Central Bank is leading the charge in the next wave of central bank stimulus measures, but experts and former central bankers argue it will be insufficient to deal with the looming global downturn.

Why it matters: Central banks see that the global economy is in trouble and they are stepping in to act, but are responding to new problems with old solutions. The eurozone already has negative interest rates and the ECB already has spent trillions buying bonds in an attempt to stimulate the economy. In spite of these efforts, major European economies have been unable to generate inflation or growth that's even close to their targets for years.

What's happening: ECB governing board member Olli Rehn said the central bank will announce a fresh package of “impactful and significant” stimulus at its September meeting that's expected to include “substantial" bond purchases as well as cuts to the ECB’s already-negative interest rate, WSJ reported.

  • Analysts expect the central bank will cut rates to -0.5% and restart its quantitative easing program with around $56 billion a month of fresh bond purchases.

What they're saying: "Unprecedented policies will be needed to respond to the next economic downturn," a report released Thursday from the BlackRock Investment Institute argues.

  • The report was authored by former Fed vice chair Stanley Fischer, former Swiss central bank chief Philipp Hildebrand, former Bank of Canada deputy governor Jean Boivin and other former central bankers.
  • "Monetary policy is almost exhausted as global interest rates plunge towards zero or below...There is not enough monetary policy space to deal with the next downturn."

The intrigue: The paper urges the introduction of "helicopter money," or “going direct” with "an explicit and permanent monetary financing of a fiscal expansion" otherwise known as central banks giving money directly to the public.

The bottom line: Central banks are gearing up to stave off a recession and highly respected former central bank leaders now see quantitative easing and negative interest rates — both considered extraordinarily and controversially powerful when they were first discussed — as insufficient to deal with the world's problems.

Go deeper: Fund managers see highest probability of recession since 2011

Go deeper

Updated 1 hour ago - World

Biden reviews U.S. arms deals with Saudi Arabia and UAE

Trump struck several large arms deals with Mohammed bin Salman (L) and Saudi Arabia. Photo: Kevin Dietsch-Pool/Getty Images

The Biden administration has put on hold two big arms deals with Saudi Arabia and the United Arab Emirates which were approved in the final weeks of the Trump administration, a State Department official told Axios.

Why it matters: The sales of F-35 jets and attack drones to the UAE and a large supply of munitions to Saudi Arabia will be paused pending a review. That signals a major policy shift from the Trump era, and may herald sharp tensions with both Gulf countries.

Trump supporter found with pipe bombs accused of plot to attack Democrats

Five improvised explosive devices that the FBI says "were fully operational and could cause great bodily harm or injury if handled improperly." Photo: FBI/Justice Department

The FBI believes California Gov. Gavin Newsom (D) and the Bay Area headquarters of Twitter and Facebook were targets of a man facing federal explosives charges, according to a criminal complaint.

Driving the news: Prosecutors charged Ian Benjamin Rogers after finding weapons including five pipe bombs, 49 guns and thousands of rounds of ammunition following a Jan. 15 search of his Napa County home and auto repair business. His alleged goal was to ensure former President Trump remained in office.

5 hours ago - Health

Fauci: COVID vaccine rollout needs to prioritize people of color

Anthony Fauci. Photo: Alex Wong via Getty Images

Infectious disease expert Anthony Fauci highlighted the need to address racial disparities in the COVID-19 vaccination process, per an interview with The New England Journal of Medicine on Wednesday.

What he’s saying: "I think that's the one thing we really got to be careful of. We don't want in the beginning ... most of the people who are getting it are otherwise, well, middle-class white people."