The Governing Council of the European Central Bank has instructed the Eurotower technicians to prepare new measures that may be necessary to counter the low inflation. This was announced by the president of the ECB, Mario Draghi, in the press conference at the end of the directorate he has today interest rates confirmed on the Eurozone at an all-time low (0,05%).
Draghi then reiterated that the Frankfurt board remains "unanimous" in its determination to make use of new extraordinary monetary policy measures, should they prove necessary in view of inflation. The factors that the ECB will evaluate, Draghi explained again, will be two: “First, if the current measures prove to be insufficient. Second, if the medium-term outlook for inflation worsens. We are well aware that there are downside risks and that we must be ready”.
QUANTITATIVE EASING NEAREST
Words that can be read as a step forward in the direction of a real Fed-style Quantitative easing, i.e. a program for the generalized purchase of private and public securities by the ECB (a move solicited just yesterday by the OECD) . Moreover, the Eurotower's first mandate is to protect price stability and must therefore bring inflation closer to the pre-established target (lower but close to 2%), avoiding the entry of the Eurozone into a deflationary spiral.
SOON YOU WILL BUY ABS, ECB FINANCIAL STATEMENT AS AT THE BEGINNING OF 2012
Draghi also added that the ECB "will soon start buying ABS" and that the program will last "at least two years", after the purchases of covered bonds started last month. These two measures add up to the Tltro auctions, the new long-term subsidized loans for banks, which are obliged to use the liquidity obtained to finance the real economy. All this “will have a significant impact on our balance sheet – Draghi underlined again -, which will return to the size of the beginning of 2012”.
ECB BOARD: NONE COALITION O NORTH-SOUTH DIVISION
The President of the ECB then stated that in the Governing Council “there are no coalitions, there is no division between North and South: absolutely not. It's normal to disagree on some things, it happens everywhere from the Bank of England to the Bank of Japan. It's part of normality. The best answer to those who talk about internal fronds on the board is in the press release I just read, which contains relevant news, and which was unanimously approved”, concluded Draghi.
