Brussels, 15/04/2015 (Agence Europe) - The European Central Bank (ECB) says that quantitative easing (the large-scale purchase by the bank of public and private debt) is working effectively.
“The implementation of our asset purchase programmes is proceeding smoothly, with volumes in line with the announced figure of €60 billion of securities per month. In addition, there is clear evidence that the monetary policy measures we have put in place are effective. Financial market conditions and the cost of external finance for the private sector have eased considerably over the past months and borrowing conditions for firms and households have improved notably, with a pick-up in the demand for credit,” explained the head of the ECB, Mario Draghi, on Wednesday 15 April as he emerged from a Governing Council meeting.
On 10 April, the ECB bought €61.7 billion of public securities as part of the quantitative easing it began at the beginning of March (see EUROPE 11289 and 11268). In parallel, it is also buying private asset-backed securities (ABS) and covered bonds.
Draghi pointed out that QE “purchases are intended to run until the end of September 2016 and, in any case, until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium-term.” In March, eurozone inflation stood at -0.1%, higher than the -0.6% observed in February. It is expected to remain very low this year but start to pick up at the end of 2015. In its inflation analysis, Draghi said the ECB will concentrate on “trends in inflation, looking through unexpected outcomes in measured inflation in either direction if judged to be transient and to have no implication for the medium-term outlook for price stability.”
Draghi, the former governor of Banca d'Italia, described as “a little exaggerated and premature” the fear that the ECB might run out of public securities, because banks are required to hold a certain amount of sovereign bonds. He said it was important for the member states to pursue structural reforms to accompany and amplify the impact of QE in the real economy.
On Wednesday, the ECB kept interest rates unchanged, with the major refinancing rate at 0.05%, the marginal loan facility at 0.3% and the deposit facility at -0.2%.
The press conference after the ECB Governing Council meeting was briefly interrupted by a woman shouting “End ECB dictatorship.” Before being bundled out of the room by the ECB's security guards, she ran up to the ECB president and threw confetti in his face. Draghi kept his sang froid and continued talking a few minutes later. (Mathieu Bion)