"The purchases of covered bonds will begin in mid-October, while those of Abs they will kick off in the fourth quarter of this year. These measures should further encourage the recovery of credit to the economy and will last at least two years”. She announced it today Mario Draghi, president of the European Central Bank, during the press conference at the end of the meeting of the Eurotower Governing Council which took place this morning in Naples. Previously the board had Eurozone interest rates confirmed at historic lows.
Draghi acknowledged that the ABS and covered bond purchases will have a significant impact on the central bank budget, but he also added that "the problem should not be emphasized: it is important for us to increase inflation to around 2%".
“We have decided to include countries in the program that also have a rating lower than Bbb-, such as Greece and Cyprus – continued the number one of the ECB -, but we will adopt a series of precautionary measures to ensure that the assets purchased in those countries have the same level of risk as those purchased elsewhere”.
Draghi then reiterated that the Frankfurt directorate is unanimous in its determination to make use of new extraordinary measures “if it will be necessary to avoid the risks associated with an excessively long period of low inflation”.
La economic growth the euro area continues, however it is necessary to "closely monitor" the assumptions on the basis of which this recovery dynamic is expected to proceed, warned the president of the ECB, recalling that all the risks remain biased towards low and that high unemployment tends to hold back activity.
As for theinflation of the euro area, "according to the ECB, "will remain low in the coming months – continued the number one of the central institute -, to then mark a progressive recovery in 2015 and 2016. Among the risk factors of further declines in the cost of living, the Council will monitor the repercussions of the weakness in growth, geopolitical developments and the effects of the euro exchange rate”.
The various measures implemented by the ECB in recent months “will undoubtedly require time to give the desired effects”, concluded Draghi, citing the Tltro auctions (the new long-term refinancing to banks, linked to credit to the real economy), the rate cuts and the ABS and covered bond purchase plan.
