The European Central Bank Just Stepped Up Its New Stimulus By Buying €4.8 Billion Of Bonds

Mario Draghi REUTERS/Yves HermanEuropean Central Bank president Mario Draghi.

The European Central Bank (ECB) just announced that it has bought €4.8 billion ($US6 billion) in covered bonds, or debts backed by loans, in its latest stimulus plan.

The value of bonds bought rose to €4.779 billion in the last week of October, well up from the €1.704 billion bought in the previous week. At the current pace, the ECB’s efforts to expand its balance sheet by €1 trillion would take four years.

Here’s what Societe General’s Michel Martinez said in a note about the purchases earlier today:

We stick to our view that the ECB’s balance sheet will only expand by some €450bn over the next two years, of which €400bn in purchases of private assets. To achieve such expansion, we continue to believe that the ECB will need to expand its purchases into other asset classes (corporate bonds, European agency bonds) early next year.

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