Fri, Jan 23, 2015 - Page 13 News List

ECB agrees on landmark QE plan

Reuters, FRANKFURT, Germany

The European Central Bank (ECB) yesterday agreed to embark on a quantitative-easing (QE) program, which together with its existing schemes, will pump 60 billion euros (US$69.7 billion) into the eurozone economy from March until the end of September next year.

Countries under a bailout program, such as Greece, will be included, but with some additional criteria.

Meanwhile, the ECB held its key interest rates unchanged yesterday at its first policy meeting this year.

As widely expected, the ECB said in a statement that it was holding its main “refinancing” rate steady at 0.05 percent, and its two other rates — the marginal lending and the deposit rates — at 0.3 percent and minus-0.2 percent respectively.

The ECB is launching the QE program with a view to buoying the flagging eurozone economy, where inflation has turned negative and — at minus-0.2 percent — is far below the central bank’s target of just under 2 percent.

“Under this expanded program the combined monthly purchases of public and private sector securities will amount to 60 billion euros,” ECB President Mario Draghi said at a news conference.

“They are intended to be carried out until end-September 2016 and will in any case be conducted until we see a sustained adjustment in the path of inflation,” he said.

The euro weakened against the US dollar as Draghi announced the expanded asset-purchase program.

The euro fell 0.5 percent to US$1.1555 at 1:43pm in London, after sliding as much as 0.8 percent to US$1.1513. It slid to US$1.1460 on Friday last week, the weakest level since November 2003.

The shared currency fell 0.4 percent to ¥136.41. The US dollar was little changed at ¥117.92.

Meanwhile, stocks rose with US equity-index futures, while US Treasuries fell with German bunds.

The STOXX Europe 600 Index gained 1 percent at 8:40am in New York. Standard & Poor’s 500 Index future gained 0.5 percent.

The yield on 10-year Treasuries increased 6 basis points to 1.94 percent. Gilts fell and Japanese 10-year yields jumped the most since 2013.

Oil climbed 0.6 percent to US$48.09 a barrel.

Additional reporting by Bloomberg

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