Il Quantitative easing it will last longer than expected and will be extended to a new type of securities. This was announced today by the president of the ECB, Mario Draghi, in the press conference at the end of this morning's Governing Council. The decisions were not taken unanimously by the Frankfurt board, but "by a large majority".
In particular, the European Central Bank has decided to extend the current securities purchase program until March 2017, “or beyond if necessary,” Draghi said. The previous deadline for Qe (started last March) was set for September 2016. In any case, purchases will not be interrupted until inflation in the Eurozone has risen towards the official target set by the ECB, i.e. a lower level but close to 2 percent.
As for the type of bonds bought by the Eurotower, Draghi made it clear that the program will be also extended to emissions from local authorities. In addition, the proceeds generated by all Qe-related operations will be reinvested to ensure "favorable liquidity conditions" and the securities will remain in the ECB's portfolio even beyond the new deadline of March 2017.
At the end of the morning the European Central Bank had also announced a new one cut the interest rate on deposits that the credit institutions of the Eurozone park at the Eurotower itself: the yield will be lowered from -0,20% to -0,30% starting from 9 December. The decision is in line with market expectations. The objective of the measure is to indirectly incentivize banks to commit their funds to the real economy.
The Frankfurt Governing Council then confirmed the reference rate at an all-time low of 0,05% (level in force since September 2014) and the marginal one on loans of +0,30%.
The latest news concerns weekly and quarterly loans to banks, which will continue to have a fixed rate and an unlimited amount "as long as necessary" and certainly at least until 2017.
In terms of economic forecasts, the technicians of the ECB have revised downwards inflation expectations of the euro area, which they now estimate at 0,1% in 2015, 1% next year (from +1,1%) and 1,6% in 2017 (from +1,7%). According to calculations by the ECB itself, without Qe, current inflation would be half a percentage point lower.
At the same time, they have been marginally revised forecasts for economic growth have risen. Now the Eurotower estimates a +1,5% of GDP this year, compared to the +1,4% indicated in three months. The expectation of +2016% is confirmed for 1,7 and +2017% is expected for 1,9, against the +1,8% previously estimated.
The news announced by Draghi did not satisfy the markets, which decisively turned red. Immediately after the press conference of the president of the ECB, Business Square loses 1,23%. They do worse Frankfurt (-3,6%) And Paris (-3,2%).
THEeuro it shot up almost to 1,09 on the dollar, the highest for about a month. Btp-Bund Spread rising to 100 basis points.
Investors were probably disappointed by the fact that the ECB has not increased the monthly amount of purchases, which was maintained at 60 billion euros, while several analysts had assumed an acceleration. Profit taking also matters.
The news announced by Draghi did not satisfy the markets, which decisively turned red. Immediately after the press conference of the president of the ECB, Piazza Affari loses 1,23%. Frankfurt (-3,6%) and Paris (-3,2%) are doing worse.
