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Currency Analyst since 2010

RUMORS: ECB may spend €50 bln/month

Bloomberg cites the words of the two euro-area central-bank officials that the ECB President Mario Draghi proposed spending 50 billion euro a month through Dec. 2016. This would make the total size of the quantitative easing program (QE) equal to 1.1 trillion euro ($1.3 trillion).

However, the unnamed officials told Bloomberg that there will be an intense debate about this plan at the ECB’s meeting today, and the scheme may change before the final decision is announced.

The sum of 1.1 trillion euro is certainly more than the market has hoped. Earlier Draghi has expressed intention to expand the ECB’s balance sheet to the level seen in early 2012, or about 3 trillion euro. For now the central bank’s balance equals about 2.2 trillion euro, but in coming weeks this amount may shrink by 200 billion euro as outstanding long-term loans mature.

Apart from the size of the program it will be important whether its risks will be shared by all of the euro area’s central banks or kept within national boundaries. Moreover, although the sovereign bond purchases may form the core of QE, other assets such as corporate bonds are under discussion. According to Bloomberg, purchases won’t start before March 1.

Don’t miss the ECB’s rate decision at 12:45 GMT and press conference at 13:30 GMT.

 

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