Achtzig was asked six or sixty nine, immediately after the decision of the European Central Bank (ECB) head count. Although the monetary authorities had to purchase their multi-billion dollar bond program is actually, as expected, extended up to December 2017, but at the same time, the volume of their purchases.
Instead of 80 will take the ECB as of April, only 60 billion euros a month in your books. Prompt the investors wondering whether the ECB has made it so that actually the first step towards a normalisation of monetary policy – or whether the new rule will mean, possibly, but only the continuation of bond purchases in a slightly altered Form.
A proxy for the degree of confusion in the financial markets was the Euro, which shot up immediately after the decision to 1,0874 dollars in the amount, only to shortly thereafter again on 1,0734 Dollar break in and fall in gradient to the lowest level in three days.
Draghi: ultra-loose monetary policy is far from over
The resolution delivered, the ECB President Mario Draghi at the subsequent press conference: “A tightening of monetary policy has not been discussed today.” It is the Central message of the Euro-Keeper at the head of the Central Bank, which he emphasized during the question and answer session, increasingly vehemently.
Draghi’s message was clear. Like swinging, the US-based Bank to a more severe course with higher interest rates: The ultra-loose monetary policy in Europe is not over yet for a long time. “The ECB will stay on for a very long time in the markets,” said Draghi. As long as the market was under pressure, going to be the ECB with their purchases.
a Total of to a halt, the guardian of the currency, your program, especially in Germany, highly-controversial, over half a trillion euros. It had been a very broad consensus in favour of the measures taken, the ECB President.
Unanimously the decision was not, however, as we Heard, a few members of the Council have voted against a further expansion of purchases through March 2017. However, the cautionary voices on a gradual return of the ultra-loose monetary policy in Europe, were – once again – not to enforce.
“In some ways, is the bond-buying program is unlimited”
Instead, Draghi ruled out in the course of the press conference not once, that the volume of purchases could continue to rise well again. “A Return of the bond purchases could speak, if we would have decided the scope of the purchase programme step-by-step to Zero,” said Draghi. This was not the case at all. On the contrary, the ECB will continue to remain active in the market. “In some ways, the bond buying program is unlimited.”
experts do not believe this, admitting that the Euro without ECB support to survive. Although the 19 countries, called on Draghi once again to find through a comprehensive set of reforms economically closer to each other. But the economic differences within the monetary Union continue to be immense. Only the ECB seems to be in the position to prevent a break-up, especially as in each of the member States, the public mood against the Euro.
Recently, the Central Bank was in their bond purchases, however, increasing problems encountered, to find enough titles that you may take according to their own rules in the books. Overall, the ECB has taken since the Start of its bond programme, papers in a volume of well over 1.5 trillion in their books. In order for the work to continue, has expanded the Central Bank the scope of short-hand.
ECB expands your buying options
in the Future, bonds with a term to maturity can be purchased by a year. So far, the Central Bank could hold only securities with maturities between two and 30 years. In addition, bonds with yields below the Deposit rate of minus 0.4 percent, are allowed starting in January. Thus, the Central Bank expanded the number of the purchase of the rotatable bonds. Alone with Federal bonds, the ECB revealed in a title with a one-year maturity and a volume of around 160 billion euros.
In the case of the German debt was, it came to bottlenecks. The return of many Federal bonds was fallen so heavily that the ECB could not buy them. This Problem seems to be resolved. As the only restriction the rule is still that of a specific state bond, only a third can be held.
“The reduction of the purchase volume is moving in the right direction. But this should not obscure the fact that the volume of purchases is still very high, especially since, in addition, the funds from the maturing bonds to be reinvested. Of a phase-out can therefore be no question," said the Bonn-based economy Isabel way, the Beak of the ECB decision.
DIHK calls for an exit from loose monetary policy
Critical voices also came from the German economy. “Today’s ECB decision is going in the wrong direction,” complained foreign trade chief Volker Treier from the German chambers of industry and Commerce (DIHK). Against the Background of the already very loose monetary policy of the reforming zeal of the European countries have slowed recently. The back support investment despite the low interest rates showed that it hapere less in the financing, but, above all, at attractive economic and political conditions.
“Political events are not allowed to determine the monetary policy in Europe – even Italy is no exception,” said Treier, with a view to the government crisis in Rome after the failed constitutional referendum. Critical of the view had to be on prices, and would have in Germany, but also because of the good labour market situation and the associated wage increases. “Therefore, it would be important that the ECB have in a timely manner with a step exit from the low interest rate policy.”
Inflation in Europe will probably be again
in fact, a rise in Inflation in Europe is expected to grow further in the coming months. According to the updated forecast of the ECB Economists, the ranges for the first time, to the year 2019, could climb the inflation until then, up to 1.7 percent. However, consumer prices would remain below the price stability objective of the monetary authorities of close to 2.0 percent, which Draghi stressed.
have Also probably played the political uncertainties in Europe, particularly in Draghi’s homeland Italy, in the considerations of Central bankers a big role. While Italy has the 63 government reshuffle in 70 years, in Germany, France and the Netherlands in 2017 elections in the coming year.
Should win in the major economies in the currency area populist parties on the ground, this could slow down the already low willingness to reform the country. The ECB would then be asked once more as a buyer in time of Need. Today has left little doubt that the monetary authorities will do just that.
Should put the Central banker, your program is actually so, as announced today, would be the end of 2017, well 2.3 trillion euros in the books. This corresponds to about one-fifth of the gross domestic product of the entire Euro-Zone. In the case of this size is orders of then even the head count at some point difficult.