The European Central Bank kept rates unchanged in March, as pretty much everyone expected.
After the decision to bring in a bigger-than-expected QE bond-buying programme at the end of January, little was expected from today’s announcement – but the press conference showed that the ECB has significantly hiked growth forecasts for the bloc.
Here’s what Draghi said, and here’s his full introductory statement:
- ECB QE begins on 9 March 2015.
- GDP growth of 0.3% in Q4 was “somewhat higher” than expected and surveys so far in 2015 point to improvements since then.
- The ECB is expecting growth of 1.5% this year, well up from the 1% they expected in December, and 1.9% in 2016, up from 1.5% previously.
- Inflation is likely to be at zero overall for 2015, but return to the 2% target by 2017.
- With things looking a little better again, Draghi is pushing hard again for further supply-side efforts “it is crucial that structural reforms be implemented swiftly and credibly“.
- Fiscal policy should be supportive, but sticking to Europe’s strict rules on deficits is apparently “key for confidence in our fiscal framework”.
- Draghi just called the current programme the final part of a set of policies brought in from summer last year. It’s not clear if that means this is as big as QE gets.
- A comment just made suggests the ECB won’t buy bonds yielding less than the central bank deposit rate (-0.2%).
- The upper cap on the emergency liquidity assistance scheme for Greece’s banks has been raised by €500 million, up to €68.8 bln.
Investors were looking for new lines on the duration and shape of ECB QE, according to Jennifer McKeown of Capital Economics:
We already know that the Bank plans to buy about €1.1trn of government bonds, European institutions’ debt and private sector assets between now and September 2016. But any indication that it will focus on long maturities or buy anything but the safest assets could increase the likely effectiveness and hence go down well with financial markets.
What the ECB did release was this primer on what the asset purchase programme (QE) will look like.
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