(Boursier.com) – Mario Draghi, President of the European Central Bank unveiled at the traditional conference following the meeting of the Board of Governors on Thursday, the new weapons available to the institution to boost growth in the eurozone. Earlier, the central bank had, not surprisingly, maintained the status quo on key rates. Unlike usual, the head of the ECB has not dented his remarks with an explanation of the decision on rates, but with the announcement of new measures decided by the institution. “First, we have decided to launch a program to buy assets strengthened,” he explained, in addition to the existing program on ABS and covered bonds.
Cursor 60 billion
The cursor is placed at 60 billion euros a month, until September 2016, and in any event until inflation is back on a trajectory in phase with the objective of being close to 2%. This amount is a combination of private and public debt purchases. “In March 2015, the Eurosystem will begin to purchase investment securities denominated in Euro issued by governments in the euro zone, agencies and institutions of the European Union, this secondary market,” Draghi said. Purchases of securities will be subject to eligibility criteria for countries receiving an adjustment program led by the EU and the IMF. This would be what happens in investment grade securities according to the standards of the rating agencies.
Second, the ECB will change the price of the next six TLTRO operations. The applicable rate shall be the main refinancing rate when the operations are launched. The spread of 10 points applied to the first two TLTRO no longer be needed. Finally, the cent ral bank, it had previously announced, left its key rates unchanged.
Update on the economy in the euro zone
Regarding the economic situation on the Old continent, Mario Draghi said that real GDP in the euro area increased 0.2% sequentially in the third quarter of 2014. The most recent data and the latest surveys point to continued moderate growth between the end 2014 and early this year. In the future, the recent decline in oil prices reinforcing expectations of a stronger economic recovery. The fall of the black gold prices should support real disposable income of households and corporate profitability. Domestic demand should also be boosted by monetary policy measures, the ongoing improvement in financial conditions and progress made by States in fiscal consolidation and structural reforms. In addition, exports should benefit from the global recovery. However, the recovery in the euro area is likely to continue to be dampened by high unemployment, significant spare capacity, and balance sheet adjustments necessary in the public and private sectors, said the ECB.
Overall, risks to the economic outlook for the euro area remain on the downside, but should decrease after the monetary policy decisions of the day and the continued decline in oil prices in recent weeks. Regarding prices, the ECB expects inflation still very low or even negative in the coming months …
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