ECB Draghi cut rates to zero: time low. Dodge the bags, then braking – The Messenger

cosmodrome is back. ” It is the most frequent comment among journalists and those who work in the new headquarters of the European Central Bank after an unprecedented package of new measures, in six moves, which appears far above market expectations. Surprisingly (very few I had mentioned among the possibilities) the Governing Council headed by Mario Draghi cut the main interest rate, retainer for months to 0.05%, bringing it to zero after he was told that the level reached was impassable .

also comes down the rate on the marginal lending (0.25%). The second move is a cut in the deposit rate to -0.40%, the expected by the markets. But the quantitative easing, starting in April, significantly accelerates from 60 billion monthly securities purchased 80 billion: the markets were expecting, on average, 70 or 75 billion. Another surprise move, which was mentioned for some time but no concrete signs that the ECB is now also buy bonds of non-bank companies provided they have a credit rating to investment level (ie non-speculative). Finally, it is the sixth move, the ECB from June launches a package of four Tltro loans to banks: lend unlimited liquidity to institutions that cover credits to the economy. And for the first time the interest rate on these loans will no longer be the main rate but the deposit rate, therefore negative: in practice, the ECB will pay to banks that receive a loan rate of 0.40%.

the ECB is expected that rates will remain at current levels “for a long time, and well beyond the time horizon of purchases’ who is leading in Quantitative easing, said President of the ECB Mario Draghi, giving a clear message on the ‘forward guidance’ of rates that the markets strongly expected. L and measures taken today have been approved by an “overwhelming majority” who escape the doubts on the ability to act of the central banks, and the ECB in particular. With the new six pack of monetary stimulus measures, the ECB aims to “further easing of financial conditions, to stimulate credit and strengthen” the recovery, has added further explaining that n el new package of four maxi-Tltro loans to banks, the banks will pay a rate much more negative (starting from zero the main rate) the more they’ll credit.

“When we discuss these issues in mind we do it with not a single country, but the entire eurozone,” stressed Draghi, in answer to the question whether the maxi-Tltro loans were aimed particularly at helping Italian banks.

the ECB quantitative easing of rooms to 1,750 billion Euros with the new measures announced today include corporate bonds and bring the monthly purchases to 80 billion a month. And the overall arsenal, on the basis of technical estimates, stands at over 2.2 trillion, including the four new maxi-loans.

The ECB has raised to 50% from 33% affordable limit of each individual bond issue through the Quantitative easing. T with garlic its growth forecast for the eurozone to 1.4% this year (from 1.7%) and 1.7% for 2017 (1.9%) by formulating a forecast of 1 , 8% for 2018. Cut also the inflation estimates for the Eurozone to 0.1% this year (1%) and 1.3% for 2017 (1 , 6%) formulating a 1.6% forecast for 2018.