business
Wednesday, January 21, 2015
Eagerly the decision of the European Central Bank is expected to bond purchases on Thursday. Brings about 50 billion euros monthly Insider on Wednesday night into play. That might be too little, experts warn.
The European Central Bank is to combat stubborn economic downturn in the solid. A person familiar with the situation told Reuters that there can not a suggestion in the room, which provides bond purchases in the amount of 50 billion euros per month. This should start in March. About the proposal of the Executive Council shall advise in Frankfurt on Thursday.
The “Wall Street Journal” and the financial agency “Bloomberg” had previously reported on the details. The European Central Bank declined to comment. According to the “Wall Street Journal” the controversial purchases are expected to last at least one year. According to “Bloomberg” they are likely to start in March and run through the end of 2016.
Meanwhile tried Austria Federal Reserve Chairman Ewald Nowotny markets to calm down before the highly anticipated decision of the monetary authorities. However, in the stock and foreign exchange markets led to large fluctuations. The Dax finally turned positive again in and ended trading 0.41 percent higher at 10,299 points. The euro fell below $ 1.16.
purchase program to prevent deflation
With the large-scale purchase program deflation should be nipped in the bud, so slipping the economy into a prolonged slump with falling prices across the board and shrinking investments. ECB President Mario Draghi recently held the door for the purchase of government securities already – in the jargon “quantitative easing” called – well presented. About the details of the program will be fought, according to insiders to the last.
According to the co-head of Deutsche Bank, Anshu Jain, a volume of 500 billion euros would already be a slight disappointment. The market was expecting a volume of 750 billion euros. A trillion euros would be a positive surprise, Jain said at the World Economic Forum in Davos. The expected purchase program will bring profound impact on European financial institutions with and increase the overall stability in Europe. There will be fewer bankruptcies – the banks would then also less money for impaired loans to cover. However, means “Quantitative Easing also very low interest rates.
According to OECD Secretary-General Angel Gurria, the ECB should not lids their program and let Draghi free hand.” Let Mario go as far as possible, “said the Chief of the industrialized countries Organization in Davos. Accordingly, the ECB should so many bonds and buy for such a long period, as it is necessary for higher inflation and stimulate the economy. The ECB aims to inflation rate of just under two percent. Of these, they dont but miles away. Finally, the prices fell in the Euro-zone as much as 0.2 percent.
More warned about
Meanwhile, German Chancellor Angela Merkel signals that might impede the reform efforts of the euro countries. This must be counteracted in any case, “Merkel said in Berlin. “Everything else we have to wait,” she added, referring to the independence of the ECB. The President of the Swiss bank UBS, Axel Weber, the ECB urged not to turn the very big wheel. “You should not do too much.” This accounted for an incentive for reform. Europe’s politicians have, however, also failed to use the time for reforms that they have procured the ECB.
For the German industry, it is by now a foregone conclusion that ECB chief Draghi green light for further will be flood of money. “If the program was not announced, that would be bad, because the markets already expect,” the president of the Federation of German Industry (BDI), Ulrich Grillo said. It would be for all a “great risk” if the ECB after all these hints do now backed down.
Source: n-tv.de
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