ECB reaches first month QE goal
April 7, 2015
In the first stage of a trillion-euro effort which is currently set to continue until at least September next year, the European Central Bank (ECB) said it had met its monthly goal of buying some 60 billion euros ($65 billion) worth of government and corporate debt with freshly-minted money.
Since launching its trillion-euro economic stimulus program on March 9, the chief monetary authority for the 19 countries which use the euro currency said it had bought 52.52 billion euros in bonds issued by EU governments or euro-area institutions up until April 3, and purchased additional private sector bonds to reach its 60-billion-euro goal.
The initiative, called Quantitative Easing or QE, involves pumping euros into the economy - effectively freshly-printed money - in an effort to combat deflation and boost growth in the economy. The ECB asserts that its program should make credit easier to access, thereby increasing possibilities for growth, innovation and job creation.
"With the first month of its expanded asset purchase program complete, the ECB can look back at a success," Berenberg bank economist Christian Schulz told news agency AFP. "This strong implementation, especially given that the ECB only started the sovereign purchases on March 9, should dispel fears that the ECB will not find enough sellers for its purchases."
Long road ahead
The ECB plans to continue the program to the tune of about 60 billion euros a month, each month until at least September 2016, making the stimulus package's total value about 1.1 trillion euros ($1.2 trillion). The ECB's goal is to achieve about 2 percent consumer price inflation - currently it stands at about negative 0.1 percent.
The effects of the program, which was announced in January, were already being seen in the form of a drop in borrowing costs for eurozone governments, a weaker euro and more positive economic confidence indicators. Major European stock indexes have reported a strong first quarter for 2015, especially Germany's DAX. Risks of the program, however, include the formation of asset price bubbles and the possibility of complacency among governments with regards to making progress on structural reforms needed to underpin lasting economic growth.
Similar quantitative easing programs have in the past also been used by the central banks of Britain, Japan and the United States.
se/msh (Reuters, dpa, AFP, AP)