ECB Draghi: March 9 purchase bonds to support the economy … – The Messenger

BRUSSELS – For the European Central Bank is a historic turning point. “On March 9, we will begin to buy securities in the public sector”, announced yesterday its president Mario Draghi, after a meeting of the Board of Governors in Cyprus.
“We will also continue to buy government bonds and Abs,” Draghi said: “The monthly total purchases of public and private securities will amount to 60 billion.” For the first time in its history, the ECB is launched in QE (Quantitative Easing, ed), despite the ban of the Treaties to buy sovereign bonds. Overall, the program should allow you to inject liquidity to 1.14 trillion over the next 18 months. Printing money, the ECB hopes to revive growt h and inflation. But in order for the QE produces full effect the governments of the euro zone must “contribute decisively,” Draghi warned: “A cyclical recovery based on our forecasts of March leaves no room for complacency.” For the president of the ECB “is crucial that structural reforms are implemented quickly, credible and effective” and that the Stability Pact is fully implemented.

FORECASTS
 Estimates of the ECB on price, updated yesterday, show the urgency to act. Inflation this year is expected to zero, against 0.7% estimated last November. “Inflation is expected to remain very low or negative in the coming months,” said Draghi. Only in 2017 will return to levels close to 2% – the statutory objective of the ECB – with a forecast of 1.8%. But, according to Draghi, the announcement of Quantitative Easing has already produced results on growth. “We have already seen a significant number of positive effects” after the decision of 22 January, said the Chairman. “The risks to the economy are still bearish, but declined.” The recovery should extend and strengthen “gradually.” The estimates have been revised up 1.5% in 2015 (compared with 1% forecast last November), 1.9% in 2016 and 2.1% in 2017. In addition to the quantitative easing, also fall oil prices and the euro exchange rate should help speed up the recovery.

MARKETS
 The euro continued its descent on the dollar, closing near the threshold of 1.1 after hitting a new low for 11 years. European stock markets reacted positively, with Milan which gained 1.22%. The spread between ten-year BTPs and Bund fell to 97 points. Even the Athens Stock Exchange gained 1.79%, but tensions over Greece are likely to increase in the coming days. Draghi has closed the door to favorable treatment for Alexis Tsipras, excluding the Greek bonds by Quantitative Easing and a ceiling increase of short-term securities that banks Athens can buy from their government. “The ECB is an institution founded on the rules, it is not a political institution,” said its president, recalling that Frankfurt “has doubled its loans 50000000000-100000000000 last month and a half.” Despite the alarm for escape banking underway in Greece, the Board of Governors agreed that the banks only 500 million more in emergency liquidity provided by the ELA program. The stakes for Greece “are not political decisions” of the ECB, “but the result of rules,” said Draghi. Only if Athens to its commitment with international creditors on reform and rehabilitation, the ECB will reintroduce some exceptions. Draghi Tsipras accused the government of having caused “the volatility in the markets,” because his “communication increases spreads and destroys side, damaging the solvency of the banks.”