Mario Draghi’s QE program to help the Eurozone

The European Central Bank has raised the economic forecast to 1.5%, leaving benchmark rate unchanged to 0.05% at the Cyprus’ policy meeting on Thursday.



The ECB president, Mario Draghi announced a $ 1.2 trillion stimulus package which was initially discussed from January’s bank meeting.



The QE program, expected to be launched on Monday, should be able to stimulate the economy by fixing the decline in consumer prices and stave off a deflationary inflation.



Mario Draghi who initially struggled to reach a QE compromise is now declaring victory before the launch, leaving doors open for more bond buying until September 2016.



He expects the economy recovery to strengthen gradually after the sluggish growth of 0.3 in the last quarter



However, the ECB president also affirmed that the bank would not consider bonds below the interest rate for commercial deposits.



The Euro weakened to 1.106, hitting to 11 year lows against the dollar due to bond gains after the ECB announcement.



According to Joerg Kraemer, Chief economist at Commerzbank AG, the central bank may eventually have to opt for more stimulus if private banks remain unresponsive of the ECB’s measures.



Concerning Greece, the ECB is lending about 68% of the country’s gross domestic product, highlighting that the central bank is practically the main bank of Greece.



Source:Bloomberg
Priscilla Camryn By: Priscilla Camryn
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