Will the ECB increase asset purchase in 2016?

By FXStreet FXStreet (Mumbai) – Inflation in Eurozone has stayed too low for way to long. Currently, inflation is just 0.2 per cent and has been below 1 per cent for more than two years. The ECB on 3rd December had slashed deposit rate by 10 basis points on 3rd December, along with extending the current QE programme to March 2017. It also said it would reinvest the principal payments on the securities purchased to support liquidity conditions. The markets were however not satisfied as the central bank delivered less than it had promised.

The central bank disappointed the markets as it did not expand the amount of bonds purchased under QE programme. The ECB chief Mario Draghi had on 14th December assured markets that the central bank would do all that it takes to push up price pressures in the euro zone. He stressed that there was no limit to the tools that could be used to push inflation towards the 2 per cent target. He said “If the ECB had to intensify the use of its instruments to ensure that it achieves its price stability mandate, it would”.

An annual Financial Times poll of eurozone analysts however forecast no further easing …read more

Source:: FX Street