Thursday, January 19, 2017

ECB: a Central Bank can be no end to the bond purchases – discover THE WORLD

In Germany, and a growing fear of Inflation. For Mario Draghi, this is a luxury problem. Although the President of the European Central Bank (ECB) as the chief monetary guardian is for stable prices. But the fear that the recent surge of Inflation in Germany could be a threat, he doesn’t like to share.

“The risk of inflation continues to be subdued”, dismissing Draghi, the journalists at the press conference after the ECB rate meeting. The most recent price rise was mainly due to the increase in the price of Oil and therefore of little importance.

source: infographic world

The almost demonstrative unconcern, with the help of Draghi the theme of met, is in stark contrast to the public mood in Germany. In December, the inflation rate increased from 0.8 to 1.7 percent, the biggest jump in 24 years. Since then, the number of those who are calling for an early end to the ultra-loose monetary policy grows.

the debate is particularly Exacerbated by the fact that savers must in this country do continue with zero interest rates. As long as Inflation was low, the anger about the ice age for invested assets within limits. But now, if the inflation should actually have the Power to push back, should Draghi on the topic are also fighting in the German election.

Draghi stays loose – the irritated

A first taste of the “image”, the lifted just in time for the interest rate meeting of the ECB on Thursday, the Inflation on the title page provided, and a detailed listed of what is in Germany everything is more expensive.

ECB’s renewed bond purchases until December 2017

The ECB extended its controversial bond-buying program, to ensure, in the future, but less money. Financial scientist Prof. Jörg Rocholl is in the N24 Studio for an assessment.

source: The world

Draghi’s Nonchalance in regard to the danger of rising prices seemed to be irritated during the press conference, the present Rapporteur visually. Again and again the President of the ECB was confronted with the question of when the Inflation a danger for the monetary policy and the ECB wants to respond. Draghi was obliged then, a little lesson in inflation customer.

the Four criteria must be met before the currency would take the Keeper measures against the inflation rate: The inflation trends in the individual countries of the Euro Zone must match. Inflation may not be temporary in nature, but must manifest itself in a sustainable way. The inflation must be self-sustaining and not solely the result of ultra-loose monetary policy.

And finally, the Inflation must have been exceeded across the Board in the Euro-Zone to a certain level. But that’s not enough: The ECB chief also made clear that its inflation target continues to be designed in the medium term. Means: Even for the case that the four criteria are met, he can ignore a certain amount of time.

But so far, the Euro area is not from the point of view of the guardian of the currency, anyway. According to clear, Draghi also acknowledged with the idea that the ECB could adopt in the foreseeable future out of their multibillion-dollar bond purchases and the so-called Tapering, so the gradual phase-out of ultra-loose monetary policy will start.

Low interest rates were needed now

“We have not discussed in the December Tapering, and we have not done well this time,” said Draghi. On the contrary, Should practice the prospects for Inflation to decline, ready to stand, the ECB, to your program if necessary.

in mid-December had been decided, the ECB, to reduce the volume of its bond purchases from April from 80 billion to 60 billion euros a month. As a first step to get out of this measure, Draghi does not want to know, but it’s understood, but at best as an adaptation. Thus, the governing Council may extend the software the program a second Time, has given the Central Bank is even new rules for the purchase.

source: infographic world

This may also be papers bought, their interest rates below the ECB Deposit rate of -0.4 percent. On Thursday, the ECB clarified the technical Details. Thus, the greater freedom at the time of purchase on government bonds should be avoided as much as possible.

Draghi addressed the press conference, once again, directly to the German savers. “The low interest rates now are required to have in the future a higher rate of interest. This is in the interest of all, including Germany," he said. The Germans would have benefited, like all other citizens of the Euro-Zone, the ECB’s measures to stabilize the economy and prices in Europe. Now you should have patience.

But after nearly five years of zero interest rates is likely to be ordered to the German savers. And also, experts do not criticize the ECB to ensure that this is at least a piece of in the direction of normality. Especially since both sides of the Atlantic shortly before the arrival of Donald trump as US President, the interest increasingly attract.

the Ifo President Clemens Fuest regretted the decision not to reduce the purchases of government bonds stronger and to go gradually, under the monthly sum of 60 billion Euro. “It would be better to reduce the scope of the purchases starting in April, month-to-month to ten billion euros,” he said.

According to the Institute should rise in the Eurozone inflation rate in 2017, to an annual rate of 1.5 percent. “This is close to the just under two per cent, envisaged by the ECB. The Argument for the bond purchases is weaker," says Fuest.

ECB could be a brake on the Fed

Also, at the world economic forum in Davos, the ECB moves the mind. The question might be when to move the ECB from its ultra – loose rate and whether at all – is discussed a lot. Many experts no longer expect that Draghi will still get in his term, which extends until 2018, truly sustainable from its crisis policy.

“for Draghi to keep the Euro Zone together, and as long as he is in office, it’s going to work,” said Citi chief economist Willem Buiter in Davos for the “world”. But the end of his term in office could cause major shocks in the monetary Union. “I can’t think of a successor, similar to persistent this course in monetary policy,” says Buiter.

For the former Bundesbank boss Axel Weber, who has exchanged his position as a Central banker, in 2011, in advance against a Post at the Swiss UBS, could be the ECB even to the brake pad for the US Central Bank, the Fed. The Fed will let the scissors for the ECB not to far rise, he said at the world economic forum.

Draghi himself will take no position. On the summit of the Mighty meeting is this time the President of the ECB, but the Executive Board member Benoît Coeuré.


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