ECB to launch €1-trillion bond buying programme on 9 March

05 Mar 2015


ECB President Mario DraghiThe European Central Bank (ECB) will start repurchasing government bonds beginning 9 March, in a programme aimed at pumping €1-trillion in new cash into the euro zone economy, in a bid to boost sagging growth and lift inflation.

The ECB will purchase sovereign debt at the rate of €60 billion ($66.74 billion) a month until at least September 2016.

"We will on 9 March 2015 start purchasing euro-dominated public sector securities in the secondary market. We will also continue to purchase asset-backed securities and covered bonds which we started last year," ECB President Mario Draghi told a news conference after the bank's policy meeting in Cyprus.

ECB, at its meeting on Wednesday, also decided to keep interest rates unchanged. Accordingly, the rate on loans provided to banks under the marginal lending facility will remain at  0.30 per cent while the main refinancing rate has been fixed at 0.05 per cent. Bank's deposits will continue to attract negative interest rate at    (-) 0.20 per cent.

''Based on our regular economic and monetary analyses, and in line with our forward guidance, we decided to keep the key ECB interest rates unchanged. As regards non-standard monetary policy measures, the focus is now on implementation,'' Draghi said.

They quantitative expansion will be conducted until there is a sustained adjustment in the path of inflation which is consistent with ECB's aim of achieving inflation rates below, but close to, 2 per cent over the medium term, he stated.

The buying will start as the euro zone showed signs of accelerating growth with major consumption and leading indicators beating forecasts since the ECB unveiled the asset purchase plan on 22 January.

Draghi said the ECB's moves would support the emerging data.

Eurostat data showed that real GDP in the euro area rose by 0.3 per cent, quarter on quarter, in the last quarter of 2014, which was somewhat higher than previously expected. The latest economic data and, particularly, survey evidence available up to February point to some further improvements in economic activity at the beginning of this year. ECB expects expect the economic recovery to broaden and strengthen gradually.

''The low level of the price of oil should continue to support households' real disposable income and corporate profitability. Domestic demand should also be further supported by our monetary policy measures leading to ongoing improvements in financial conditions, as well as by the progress made in fiscal consolidation and structural reforms.

"Moreover, demand for euro area exports should benefit from improvements in price competitiveness and from the global recovery. However, the euro area recovery is likely to continue to be dampened by the necessary balance sheet adjustments in various sectors and the rather slow pace of implementation of structural reforms,'' Draghi added.

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