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Draghi announces 60 bn euro QE, keeps rates unchanged

The European Central Bank has kept its benchmark interest rate unchanged. However, a full blown quantitative easing announcement is expected later in the day when ECB chief Mario Draghi addresses a press conference.

After the Bell

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The News International Team

The European Central Bank kept benchmark interest rate unchanged but announced monthly bond buying programme  amounting to 60 billion euro till September 2016. Announcing the extent of Quantitaive Easing, ECB chief Mario Draghi also said the central bank will work twoards the objective of bringing inflation closer to 2 percent.

The ECB has left both marginal facility interest rate and deposit facility rate unchanged at 0.3 percent at -0.2 percent, respectively.

Policymakers attending the World Economic Forum in Davos were certain that ECB would announce a QE —street was pegging iot lower at 50 billion euros per month — but remained skeptical of its success. Speaking to CNBC-TV18 in Davos, Jan Lambregts, Director, Head of Research (Asia) at Rabobank said he does not expect the ECB to give a full-fledged plan today.

Federal Reserve’s three rounds of QE theoritically suggests the exercise would pump up stocks, commodities and bond yields leading to some real economic growth. If Draghi goes for it, he is expected to roll out similar initiatives instead of stopping at one.

ECB’s bond-buying programme is expected to push the dollar to new highs and put downward pressure on commodities including crude.


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