The governing Council of the Ecb in today’s meeting, has decided to confirm the Qe, the program of purchase of government and private securities in the Eurozone, up to march 2017, its original maturity date, the current volume of 80 billion per month, and has announced an extension of the same program from April to December, 2017, a reduced volume of 60 billion per month. In a footnote, the Board stated that purchases will continue “at the rate of 60 billion a month, from April 2017 until December 2017 or beyond, if necessary, and in any case until the governing Council will not see an adjustment that is sustainable in the path of inflation consistent with the inflation targe t”, which is a rate close but below 2% in the medium term.
“If, in the meantime – continues the note – the prospects were to deteriorate or if the financial conditions were not more in line with a further progress towards an adjustment on a sustainable path of inflation, the governing Council intends to increase the program in terms of volume and duration. Net purchases of securities will be implemented together with the reinvestment of capital by those already purchased and in maturity”. For the successful implementation of the program of purchases, the note concludes, the Council also decided “to modify some of the parameters of the plan.”
The press conference of Mario Draghi
In the course of the press conference, the Ecb president Mario Draghi has stated in the measures taken today by the board of the Ecb, specifying that the program of securities purchases is extended to sovereign bonds with a residual life which drops from 2 to 1 year; at the same time extends the possibility of buying securities with a lower rate of deposits. Together with the extension time of the program to the end of 2017 (and beyond if necessary”), these measures enhance the operation of quantitative easing as a tool of stimulus for investment in the real economy. “You still need to – he said Dragons at the beginning of the press conference – a strong level of monetary stimulus. We will stay on the market long,” said the president of the Ecb, which has stated that in the course of today’s meeting are not discussed tapering, i.e. the reduction of the plan of quantitative easing by the central b ank.
The Ecb slows down the Qe, but is not a pre-tapering
the Dragons, in his analysis of the economic framework of the Eurozone, recorded inflationary pressures “still light”, an economic recovery that continues and strengthens in the fourth quarter of the year. Regarding the economic forecast for the current year, the Ecb puts those on Gdp at 1.7% in 2017 by 1.6% in the subsequent two years; at the same time, the institute raises estimates on inflation in 2017 to 1.3%, 1.5% in 2018 and 1.7% in 2019. “The risk of deflation has largely disappeared” in the euro area, said Draghi responding to a question on the amendment of the terms of eq.
Draghi has also mentioned the necessity of structural reforms in all european countries, in particular as regards investments in infrastructure, the sector is "crucial" for economic development.
“Mps and Italian banks? Ask the board”
The question of a journalist about the vulnerability of Italy after the referendum that is seen to prevail the no, Draghi said: “I Think that the vulnerability of the banking system and Italy endure for a long time and, therefore, must be resolved. I am confident that the new Government will know what to do and that these problems will be solved”. Regarding the time that should have the Italian banks to put the accounts in place, the Dragons preferred not to answer and said that “on the basis of the principle of the separation of tasks, these are things that you need to ask the supervisory board of the Ecb”. In any case, Dragons has excluded "risks for the euro" by the Italian banking system.
in front Of the insistence of some journalists in asking questions about the political situation and the Italian financial, Draghi answered: “Of course my work is not focused (“focused”) on the countries of Europe’s southern”. “No, no, of course not. We are not part of it,” responded the Dragons to a question about criticism from some Countries, Germany in the head, with respect to the action of the Eurotower, which would support in particular the countries of southern Europe, Italy included.
“I know very little of this hypothesis of a loan from the european stability mechanism (Esm) to Italy for its banks,” added the president of the
the Ecb Mario Draghi, that then, with regard to the indiscretion of the press, has bed what is foreseen by the legislation establishing the Esm: “That there is absence of alternative solutions” and that “you are not able to fill the need of capital solutions private”.
The role of the policy
In 2017, he added Dragons, presents a calendar of election is a source of uncertainty. “The Countries that need reforms should make them regardless of the political uncertainty in general. Is the best way to restore growth and the
the creation of jobs,” he said, responding to a question on the Italian political situation after the referendum.
The markets have proved to be much more resilient than expected” in the occasion of the big events politicians of the last few weeks and months, explained Draghi, at the press conference, citing the response of the markets to the referendum the british on the Eu, presidential elections in the Usa and, most recently, the ‘no’ to the constitutional referendum in Italy. “We were expecting significant repercussions at the global level and in all three events it was not to be,” he said.
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