The ECB does not touch rates. Draghi expects to extend the Quantitative easing – The Republic

MILAN – The European Central Bank has decided to not touch interest rates and expect to extend the Quantitative easing , the purchasing plan of securities by 80 billion per month, whose horizon is now set for March 2017. Doors open, however, in its prolongation in the following months, likely to be announced at the December meeting.

as widely anticipated by the market, the cost of money in the Eurozone remains set at the level in force since 16 March, with the main refinancing rate to zero. However, it remains negative (-0.4%), the rate on deposits. The latter regulates the performance that normally as they always banks earn on their short-term deposits (one working day) at the Central Bank. Since June 2014 this rate is negative, and therefore the banks pay to leave their cash parked at the Eurotower.

It was not in terms of the cost of money that operators were expecting news. Observers thought they could get the time extension of Q and , at least six months beyond the deadline of March 2017, or a review of its mechanisms to ensure greater flexibility to purchases made by national banks under the coordination of the ECB itself. In its Communication on interest rates, however, the ECB has reiterated its position making it clear that for “non-standard monetary policy, the Governing Council confirms its intention to conduct the monthly asset purchases to 80 billion euro until the end in March 2017, or even beyond if necessary, and in any case until evolution may find a lasting adjustment of prices, consistent with its inflation target of “close to 2%. Lately, on the other hand, it had made its way the hypothesis that the ECB could be wait-on program changes, because the economy – although weak – did not give clear signs of shock after the Brexit referendum. The status quo has had the effect of strengthening the euro on the markets.

During the ritual press conference, the president Mario Draghi explained that while the Directorate has instructed relevant structures to assess what are the options to be considered for a successful implementation of the securities purchase program, specifying also in response to questions from reporters that the topic has not been discussed yet. The doors to a Q and supplement, to be announced in the meeting at the end of 2016, therefore, remain open. Even some technical modifications, we speak of the possible removal of the threshold yield of purchased titles, which now stands at 0.4% of the deposit rate, or to raise from 33 to 55% the portion of an issue purchased by the ECB . Some open to the revision of the distribution of the purchases not in accordance with the capital that individual countries hold in Frankfurt, but based on the outstanding debt is an option but it is too much resistance, support others, to be workable.

the ECB Executive Board has received new staff estimates Frankfurt economists, who review” slightly lower “- as has specified the same Draghi – the previous estimates. Europe’s economic recovery will continue “at a moderate pace but stable” and “ascend inflation gradually in the coming months,” he said the governor noting that the measures adopted by the ECB have had a positive impact on credit conditions. As for the inflation estimates, there was a little filings 1.2% for 2017, while they remained unchanged in 2016 and 2018. For the estimates of GDP, the ECB estimates a 1.7% in 2016, and + 1.6% in 2017 and in 2018: economists have raised by 0.1 points the forecast for this year, the same amount by filing the forecast for the next.

an accent pronounced was placed by the governor on the request to the policy to do more to support growth: Draghi cited the extension of the Juncker plan and the measures to solve the problem of bad loans as central, but called on both countries to make more reforms locally and at European level.

Topics:

ECB

interest rates

cost of money

quantitative easing

Starring:

mario dragons