The Ecb is preparing a Quantitative easing longer – The Sun 24 Hours

there will be No tapering in march. The tone (and the hassle) with which the president of the Ecb Mario Draghi has dismissed the rumors about a gradual reduction of securities purchases make it very unlikely. Instead it is surely “unlikely” that the quantitative easing, the program of securities purchases to end in an abrupt way. “A stop of a sudden it is not the intent of anyone,” he said. The tapering, then, is the first if not the only, choice for the exit strategy of monetary policy. The conclusion , then, is immediate. In December, when the council of the Ecb will meet to “define the environment in which you move the monetary policy in the coming months,” it will be very likely an ex tension of the quantitative easing.

The reasoning depends, of course, by the solidity of the premise. Dragons did not want to quit no chance, and wanted to say that the tapering in march, there will be. During the meeting, they discussed the next moves but have examined the economic prospects of the Eurozone and, especially, how to deal with the problem of the scarcity of securities to buy (a theme which would become really present only in the case of an extension of the program).

Tapering, the Ecb, the “ballon d’essai” and volatility

Nothing of the discussion, however, has done a glimpse of the possibility that the policy ultraespansiva will soon come to an end. The increase in inflation in September has not been emphasized, and Draghi made it clear that “there are signs of a strong uptrend in core inflation,”. He also recalled that the link between a statistical relationship often found between the headline inflation and expectations – the only reason why you might give emphasis to a rise in the index of inflation driven by the only oil – makes it difficult to establish inferences stable”.

To abandon the policy ultraespansiva, you need to – then he remembered the Dragons – that the path of inflation towards the 2% is sustainable (“in fact, self-sustaining”) and durable. Today, the route is not self-sustainable: even if the projections indicated an inflation rate of 1.6% for the year 2018 – and presumably a little higher for the 2019 – these assume that the remains active the monetary support. The requirement of durability also provides that the monetary policy look – added Dragons – beyond the “blips”, are indications to the purely random and temporary.

By Qe pushing the loans, but “more risk of a widening gap between the rich and the poor,”

of Course, “all this does not mean that the policy ultraespansiva could last forever”, stated Draghi. This admonition, however, can not be considered as an indication of a possible change of pace. The same press release the intro has not launched any signal in this sense. “In December – she plays – the evaluation of the board of directors will benefit from the new macroeconomic projections of the staff up to 2019 and the work of the committees of the Eurosystem [of the national central banks, ed.] on the options to ensure an implementation without a hitch of our program of purchases until march 2017 or beyond, if necessary”.

The board of directors, also “remains committed to preserving the level of monetary support very large that is needed to reassure the return of inflation to levels that are below but close to 2% over the medium term”. An indication that, at the moment at least, seems little compatible with the start of tapering in march.

© Reproduction reserved