“The long-awaited QE in the Eurozone was necessary to counter deflation, as the stimulus provided to growth by previous ECB measures was increasingly insufficient. In fact, long-term rates have decreased little in real terms, ie excluding the dynamics of prices, and tend to rise as the latter decreases”. This is what we read in a study by the Confindustria Study Centre, according to which the purchase of securities for 1.140 billion euro launched by the ECB determines a 1,1 point reduction in long-term rates and causes a devaluation of 11,4% in the exchange rate of the single currency. Part of these effects have already been anticipated by the markets, therefore the repercussions on GDP will be more rapid: the overall boost will be equal to 0,8% in 2015 and 1,0% in 2016.
“In Italy, the 2011-year BTP net of core inflation remained substantially stable between 2013 and 2014, at very high levels, and only in 1,19 did it register a significant drop: 3,22% in January, from 2013% at the end of 2014 – the study continues -. However, this level is still high, if evaluated in the light of the conditions of economic stagnation. And if compared with the corresponding value in Germany, where the real long-term rate has returned to negative territory since 0,64 (-0,43% in January). In the USA the real rate fell to XNUMX%”.
Furthermore, according to the CSC, “the limited decline in real long-term rates does not constitute a strong enough stimulus to relaunch the Italian economy and that of other Euro-area countries. This is one reason for its prolonged weakness in recent years. Italy and the entire euro area are still struggling to re-emerge from the long phase of low growth and low inflation, with a monetary policy that has so far proved to be ineffective in supporting its recovery. The crisis has changed the environment, causing lower potential growth and deflationary pressures. In this difficult scenario, an even more expansive monetary policy is essential to restart the economy”.
As for real rates in the Euro area, “they are lower precisely in the economies that need them least, such as Germany – concludes the study -. Where monetary stimulus is most needed, as in Italy, long-term real rates remain broadly positive. This exacerbates the divergence between the countries of the Euro area and further complicates the management of other economic policies. Without the measures already approved by the ECB, however, various economies would have experienced an even more marked contraction than the one actually recorded. For Italy, recent estimates by the Bank of Italy5 indicate that there would have been a greater drop in GDP equal to a cumulative 2,7 percentage points in the two-year period 2012-2013 if the ECB had not adopted the non-standard monetary interventions which lowered the sovereign bond yields in peripheral countries compared to 2011 peaks”.
