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Draghi: Monthly security purchases of €60bn

22/01/2015 15:59
President of the European Central Bank, Mario Draghi announced on Thursday a quantitative easing programme of €60 billion per month to stimulate growth and to address the threat of deflation.

Speaking after the ECB decision to keep rates unchanged, Mr. Draghi said the program will run until September 2016 with the overall size being estimated at €1,14 trillion. The purchases will pertain to investment-grade securities, while some additional eligibility criteria will apply for countries such as Greece and Cyprus that are under adjustment programmes.

Purchases will be made according to the share of the national central banks to the ECB's capital which corresponds approximately to their proportion to the eurozone GDP. Central banks will take the risk for about 80% of the purchase of titles, he said.

“It has been decided to launch an expanded asset purchase programme, encompassing the existing purchase programmes for asset-backed securities and covered bonds”, he said.

“Under this expanded programme, the combined monthly purchases of public and private sector securities will amount to €60 billion”, he noted, stressing that they are intended to be carried out until end-September 2016 and will in any case be conducted until we see a sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium term”.

“In March 2015 the Eurosystem will start to purchase euro-denominated investment-grade securities issued by euro area governments and agencies and European institutions in the secondary market”.

“Some additional eligibility criteria will be applied in the case of countries under an EU/IMF adjustment programme”, he added.

Explaining the ECB movement he said that today’s monetary policy decision on additional asset purchases was taken to counter two unfavourable developments. First, inflation dynamics have continued to be weaker than expected and second, while the monetary policy measures adopted between June and September last year resulted in a material improvement in terms of financial market prices, this was not the case for the quantitative results".

Referring to the course of inflation, Mr. Draghi said inflation rates are expected to increase gradually later in 2015 and in 2016.