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The ECB extends the purchase of bonds for nine months but cuts the volume

Mario Draghi starts phasing out stimulus the acquisition of debt will be reduced by 2018 from 60,000 to 30 billion per month

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The ECB extends the purchase of bonds for nine months but cuts the volume

"Less for longer." The ECB today announced a monthly turnover of assets purchases ( so-called European QE) to 30 billion euros per month. In exchange, it lengnes monetary stimulus for additional nine months until September 2018, and leaves door open to rearm QE according to economic and financial conditions, "if prospects are less favorable". In silver: The ECB begins withdrawal of QE, which will probably expire over 2018, but leaves intact interest rates, in historical minimum of 0%, which will surely start to rise in 2019.

The president of Eurobanco, Mario Draghi, has opted to give message he had telegraphed a few weeks ago: Exactly those 30 billion were expected for nine months. The ECB fears reaction of markets (basically euro's exchange rate, which rises 12% in what goes from year to dollar and yet will go up today), and may also German establishment, very critical of extraordinary measures when RE Ration is already more than seated. Still, ECB is far from fulfilling its single mandate: inflation remains at 1.5%, and above all underlying inflation (without food or energy) is around 1%, far from sacrosanct "close but below 2%".

Two years of bond purchases

The QE started at 2015 and Draghi has spent something more than two trillion euros. Until end of this year will continue to buy 60 billion monthly, and from January will fall to 30,000: In total, program of purchases of assets close with 2.5 trillion of euros (twice and averages riquieza of Spanish economy) in acquisitions , which have allowed recovery to settle and stabilize eurozone's banking system.

The risks are still re. On political side, Brexit, situation in Catalonia and elections in Italy are most evident. Outside of Europe, what Donald Trump does with Federal reserve and landing of Chinese economy, which will sooner or later give a disgust. Therefore, most important part of ECB's announcement is not figures, but Eurobanco leaves an open door: if forecasts worsen because some of risks that are seen in horizon becomes reality, ECB could raise upright of comp and lengn its duration. Draghi has clearly marked output of QE. But it announces nothing irreversible: The Great Recession has proven to have more than seven lives, and head of ECB wants to have ammunition in case it is necessary.


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