The rate of the loan is still 0.30 per cent., The rate refinancing loan – 0.05 per cent., while the interest rate for deposits – minus 0.20 percent. (Levels set on September 10, 2014.). Analysts had expected that the ECB will keep interest rates unchanged.
According to unofficial information, Bloomberg shows that the European Central Bank Executive Board may propose on Thursday the ECB Governing Council asset purchase program totaling 50 billion euros per month by the end of 2016. O h. 14.30 is planned press conference ECB President Mario Draghi.
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According to analysts, the debt securities market, experts have predicted what it would scale QE and the program will be spread over the year, or be called. “Open-ended”, which would mean that the total of the scale may be as high as 1 trillion euros over two years. Investors do not agree to the expectations of its total assets – at first it was said that it will amount to 500-600 billion, then the forecasts were raised. Recent messages talked about buying 50 billion likely monthly Bloomberg said Wednesday.
The ECB plans to cause a lot of controversy
The European Central Bank has tried various methods to boost the economy of the euro area. One of them was a marked reduction in interest rates.
Few, however, could, therefore, the ECB reaches such radical measures. He starts to buy up the bonds of euro area countries, so as to flood the market with money stream.
The authors of the plan they hope will propel a sluggish economic situation Eurozone, as well as lead to higher inflation, which in recent months has been dangerously low.
Collection of bonds of other countries, however, is a controversial method. Objection report because rich countries, even Germany, which are afraid that in case of bankruptcy of one euro countries will need to support the Central Bank, European women your money.
Many experts doubt the effectiveness of the whole program. Also you can hear voices warning that the buying of bonds may be incompatible with EU law.
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Analysts at Capital Economics believe the ECB’s decision will affect the financial markets of Central and Eastern Europe, QE will result in three ways: in the first place will increase the demand for the assets of the region since the increase in the prices of government bonds of the euro area will encourage investors to balance the investment portfolio through the acquisition of other assets, in the countries of the European emerging markets.
Another channel will be banking relationships. Improving liquidity in the euro may prompt Western banks to maintain financial risk on the part of their subsidiaries in the region to a greater extent and for longer. The third channel of the impact of QE in the Eurozone Central and Eastern Europe is the confidence that improvements can translate into higher costs to households and businesses.
Capital Economics notes that the first round of the ECB refinancing operations in December 2011. (Ie. LTRO) caused some strengthening currencies in the region, but the second of February 2012. Did not have much echo. A possible explanation is that, while the first LTRO was a surprise for the financial markets, it was by no other anticipated.
So maybe this time: – While the action of the ECB will have no effect + shock and fear + and do not turn out to be larger than is currently expected, the reaction of the financial markets of Eastern Central Europe will not be high – mark analysts the center.
The reasons for which the intervention of the ECB is likely to prove to be limited in scale, caution is the ECB and the resistance on the part of Germany. Capital Economics also believes that the European Central Bank QE is the reason why the central bank monetary policy Central Europe will remain very loose. Reduction in interest rates for the Polish analysts predict and Romania.
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The foreign exchange market is waiting for the decision of the ECB
Analyst ING TFI Cymcyk Paul explains that the larger the reprint of money, the be weaker euro and Swiss franc higher. emphasizes, however, that if the action of the ECB might be effective, it is a few months the euro area economy will be stronger, and its rate increase. Expert explains that the purpose of the money supply in the market will be to stimulate the economy of the euro area and the fight against deflation, or a decrease in the general price level.
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