ECB Announces QE Details 23rd January 2015

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ECB Announces QE Details 23rd January 2015

Yesterday Mario Draghi, the head of the European Central Bank finally announced detail of his planned QE, almost 2 years in the making. Back in July 2012 Mr. Draghi said, rather emphatically that he was prepared to do whatever to took to pull the EU out of deflation.

It has been a long time since that speech and plenty of issues have hampered the EU presidents ambitions.

What was announced yesterday was a significantly larger scheme than many analysts had predicted and paves the way for QE on a monstrous scale.  The initial proposal is to print money to the tune of €1.1tn and starting in March, securing the purchase of EU bank bonds, up to €60bn per month.

The programme effectively spreads the ECB's funds as fairly as possible by not purchasing government bonds, thereby attempting to make sure the cash is injected where it will be utilized.

Draghi also confirmed that interest rates would remain at 0.05% as he looked to see the Eurozone start to get closer to its 2% inflation target.

European stocks responded well to the statement and are expected to continue the global rally that was seen after the announcement.

It's possible that the ECB agreed this move before the Greek elections as there is a possibility that there could be an upset. As it stands the majority in Greece want to stay within the EU however recently the far right has taken some ground. Knee jerk reactions to a Grexit ranged from the collapse of the EU to it being better for all involved if they left, we will have to wait until next week to see what the Greek public actually think.

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