by Bill McBride on 1/22/2015 12:58:00 PM
Thursday, January 22, 2015
I think this is the quote of the day via The Daily Telegraph: ECB unveils €1.1 trillion QE program
Mr Draghi rejected any criticism that the vast expansion of the ECB's easy-money policies would stoke inflation down the road, noting that inflation has stayed very low even after several interest rate cuts and abundant ECB loans to banks.Some policymakers have been wrong for years, both on monetary and fiscal policy ("austerity über alles").
"There must be a statute of limitations for those who say there will be inflation," Mr Draghi said.
And on the ECB's QE, from the WSJ: ECB Unveils Stimulus to Boost Economy
ECB President Mario Draghi said the ECB will buy a total of €60 billion a month in assets including government bonds, debt securities issued by European institutions and private-sector bonds. The purchases of government bonds and those issued by European institutions will start in March and are intended to run through to September 2016, Mr. Draghi said. The risks associated with the bonds of EU institutions will be shared among eurozone central banks, but purchases of other government bonds won’t be subject to loss sharing, he said.And from the Financial Times: European Central Bank unleashes quantitative easing
Mr. Draghi said bond purchases might continue beyond September 2016, and until there are clear signs that the annual rate of inflation is rising toward the central bank’s target of just below 2%.
Mr Draghi said the bond-buying scheme will commence in March and last until the end of September 2016, or “until we see a sustained adjustment in the path of inflation”. The €60bn monthly asset purchases include government debt, asset-backed securities and covered bonds but not corporate bonds.This buys more time for policymakers in Germany to change their approach (I doubt they will, there is no "statute of limitations" for bad ideas).
Posted by Bill McBride on 1/22/2015 12:58:00 PM