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E.C.B. Begins Its Bond-Buying Program for the Eurozone E.C.B. Begins Its Bond-Buying Program for the Eurozone
(about 2 hours later)
FRANKFURT — The European Central Bank confirmed on Monday that it had begun its long-awaited asset purchase program, a 1.1 trillion euro bid to help revive the eurozone economy.FRANKFURT — The European Central Bank confirmed on Monday that it had begun its long-awaited asset purchase program, a 1.1 trillion euro bid to help revive the eurozone economy.
The central bank’s president, Mario Draghi, had announced the starting date of the so-called quantitative easing program at the central bank’s meeting last week.The central bank’s president, Mario Draghi, had announced the starting date of the so-called quantitative easing program at the central bank’s meeting last week.
“E.C.B. and eurosystem national central banks have, as previously announced, started purchases under the Public Sector Purchase Program,” the central bank said on Twitter.“E.C.B. and eurosystem national central banks have, as previously announced, started purchases under the Public Sector Purchase Program,” the central bank said on Twitter.
The eurosystem refers to the network of eurozone national central banks, which are doing most of the purchasing on bond markets.The eurosystem refers to the network of eurozone national central banks, which are doing most of the purchasing on bond markets.
The European Central Bank did not immediately provide details of the purchases, but it had said that it aimed to buy €60 billion, or $65 billion, in government bonds and other assets each month. The purchases will continue until September 2016, or until the bank’s Governing Council is confident that inflation is heading back toward the official target of below, but close to, 2 percent.The European Central Bank did not immediately provide details of the purchases, but it had said that it aimed to buy €60 billion, or $65 billion, in government bonds and other assets each month. The purchases will continue until September 2016, or until the bank’s Governing Council is confident that inflation is heading back toward the official target of below, but close to, 2 percent.
Because the purchases were expected, market reaction was muted. European stock markets slipped slightly, while the euro rose initially against the dollar before retreating to about $1.085. Because the purchases were expected, stock market reaction was muted. European shares slipped slightly, while the euro rose initially against the dollar before retreating to about $1.085.
Much of the effect of the central bank’s policies was already reflected in the rising prices of stocks and bonds. The central bank said in January that it would begin buying government bonds, and it had signaled well before then that quantitative easing was imminent. Because of the demand, government bonds in the eurozone continued a rally that began last year, though the price of bonds fell in Greece, ​where uncertainty prevailed over the economic overhauls needed to extend its bailout. Euro-area interest rates on bonds, which fall when prices rise, declined sharply in some countries like Germany, where the yield on 10-year bonds sunk to 0.317, close the record low of 0.295 set on Feb. 26.
Much of the effect of the central bank’s policies was reflected in recent months in the rising prices of stocks and bonds. The central bank said in January that it would begin buying government bonds, and it had signaled well before then that quantitative easing was imminent.
Benoît Coeuré, a member of the central bank’s Executive Board, said in an interview on Sunday with Politis, a newspaper in Cyprus, that the asset purchase program had already had a positive effect on the eurozone economy, by pushing down the cost of credit.Benoît Coeuré, a member of the central bank’s Executive Board, said in an interview on Sunday with Politis, a newspaper in Cyprus, that the asset purchase program had already had a positive effect on the eurozone economy, by pushing down the cost of credit.
“Lending rates to households and firms have come down since the summer across the entire euro area,” Mr. Coeuré said in the interview.“Lending rates to households and firms have come down since the summer across the entire euro area,” Mr. Coeuré said in the interview.