ECB president Mario Draghi has kept aloof on the intention of the ECB to increase the balance. Possible with € 1,000 bn The goal is to raise inflation, not so much balance sheet expansion.
That the President of the European Central Bank said Thursday after the monthly interest rate meeting, which was held in Naples. this time According to Draghi, current interventions, including the buy-back programs, the details of which are known to have been made necessary to fight. Risk of long-term low inflation Earlier, the ECB announced all the new TLTRO loans to stimulate lending to SMEs and the interest rate in September to 0.05% was reduced.
Unanimously
Draghi:” Let’s see what the unprecedented measures yield. We keep a close eye on that and are unanimous in the opinion that we will use as needed. “Other unconventional measures
Off the new information on the buyout programs shows that the ECB will buy from mid-October. unsecured bonds During the fourth quarter also start the program for securitized bonds (ABS). The minimum credit judgment on both types of bonds must be BBB- and operations last at least two years.
Cyprus and Greece
For Cyprus and Greece made an exception. The credit assessment of bonds from those countries is always lower because the homeland a credit assessment below -BBB has. To ensure that the buying operation in those countries has an effect, however, lower-rated pieces may be offered.
It funds or additional requirements. Thus, the paper must be allowed at least the second highest credit judgment in that country, there should be the products are to absorb first losses extra cash pool and no more than 30% of the total per bond bought issue. Moreover, countries should fall. Utility under a European Union
Size
A size of the buy-back transactions is not disclosed, because according Draghi interacts with the provision of TLTRO’s to be seen. The effects of the purchase programs show themselves already, also in the Netherlands. The prices of Dutch mortgage bonds have risen and fallen over the interest rate (see infographic).
About Draghi’s statement last month that the ECB total assets would return towards the level of early 2012, this time he gave no further explanation. In 2012 the ECB balance sheet was dependent on the measurement time at € 2,700 bn á € 3,000 bn, € 2,038 bn now this. That would mean that the balance of € 1,000 bn should increase. Draghi, however, called it a goal in itself, the objective would be to fight. Low inflation In September, which was 0.3% compared to the same month a year earlier.
Inflation
Draghi: “I understand the desire to hear exact numbers but it’s not about the balance per se. The only mandate is to bring to close, but inflation back below 2%. That is the ultimate judge. “He added, that € 1,000 bn of paper that is to buy, but it is not said that this is done completely. However, he repeated several times that the ECB’s board unanimously prepared to take more unconventional measures (read: buyout operations) if inflation remains stubbornly low
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