The European central bank cut interest rates on deposits 10 basis points to extend the time of purchase

By Raymond Morgan,2015-08-15 15:20
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The European central bank cut interest rates on deposits 10 basis points to extend the time of purchase

    The European central bank cut interest rates on

    deposits 10 basis points to extend the time of


    On Thursday, the European central bank announced lower deposit rates 10 basis points to 0.3%, prolong the purchase until at least March 2017, expand the scope of the purchase, to boost inflation.Although quantitative easing in March this year the total scale of bond buying to at least 1.5 trillion euros, but not the ECB will monthly amount of bond buying 60 billion euros and expand to more, drive the euro soaring European stocks fell.

    The European central bank will deposit interest rates by 10 basis points, fell from 0.2% to 0.2%, hit a record low.This means that the ECB will excess charge more interest to the bank.The European central bank's move is designed to encourage Banks to lend more.The European central bank to maintain the main refinancing rate 0.05%, maintain the overnight lending rate of 0.3%, in line with expectations.

    In the subsequent press conference, the European central bank

    governordraghiSaid it was 60 billion euros ($64 billion) a month's asset purchase programme from September 2016 to March 2017.If the future euro zone inflation still cannot ascend, the project will continue to extend.This means that the ECB would buy at least more than 360 billion euros of bonds since March 2015 purchased debt total scale will reach at least 1.5 trillion euros.

    Moreover, draghi declared to expand the scope of asset purchases, the scope will be extended to the euro area and the local governments to issue bonds, no longer bureau be confined to only buy bonds issued by central Banks around the world.Expand the scope of asset purchases, will make the ECB bond buying could

    continue, because the European central bank will not buying bond yields lower than deposit rates.

    , draghi said Thursday, as long as necessary, the European central bank will keep maturing bonds to obtain funds to reinvest.

    At the meeting on October 23rd, the European central bank, Mario draghi hinted that may further monetary easing.Since then, the market's expectations of December the European central bank to take action.Last week, the Reuters poll, economists consensus forecast is for the meeting, in addition to cut interest rates, the European central bank will also put the current QE project monthly purchases of the scale is raised to 75 billion euros from 60 billion euros, or extend the purchase period, or both.

    However, from the results announced last December, the European central bank stimulus measures less than market expectations, it pushed the euro intraday had surged 2.6% to a high, European stocks also fell.

    The European central bank since march this year launched asset purchase programme, to boost inflation.But in recent monthsdataTo improve is not very desirable, inflation.Eurostat announced the latest figures show that the euro zone on November CPI 0.1% compared to the initial value, not only lower than expected 0.2%, far below the European central bank 2% of the target in the medium term;Excluding food and energy price fluctuations of core inflation rate fell to 0.9% from 1.1%.

    Face struggles to higher inflation, the European central bank's expectations are more "rational".This conference, the European central bank raised its GDP growth forecasts, but cut the next inflation expectations.In particular, the European central bank will be 2015 GDP forecast from 1.4% to 1.5% growth;Maintaining the GDP is expected to grow by 1.7% in 2016;In 2017 GDP forecast from 1.8% to 1.9% growth.The European central bank to maintain the eurozone inflation expectations at 0.1% in 2015, is expected in 2016 and 2017, inflation of 1.0% and 1.6% respectively, were 0.1% lower than previously expected.

    A series of the latest action taken by the European central bank means that two of the world's most important central Banks diverge on monetary policy.The federal reserve will be held on December 15 ~ 16 last FOMC meeting this year.As theThe United StatesThe economy recovers, more than the federal reserve officials hint that December is very possibleIncreases in interest ratesPoint, to raise interest rates expected market become more and more intense.fromfuturesMarket data, the market that the fed action probability of close to 80% in December.

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