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ECB extended bond-buying with reduced pace

Thursday, Dec 08 2016
ECB extended bond-buying with reduced pace

The European Central Bank extended its quantitative-easing program until the end of 2017, while reducing the monthly pace of purchases to 60 billion euros ($65 billion) from 80 billion euros starting in April. The Governing Council also said it will step up purchases again or prolong them if needed. Policy makers kept the main refinancing rate at zero, the deposit rate at minus 0.4 percent and the marginal rate at 0.25 percent, as predicted by in a Bloomberg survey of economists.

ECB Governor Mario Draghi said that cutting QE to €60 billion a month is not ‘tapering’ and added that tapering was not discussed at today’s meeting. Draghi said the decisions were taken to ensure the ECB has a “sustained presence in the market”. The ECB also updated its economic forecasts and said it now expects slightly faster growth and higher inflation in 2017. Draghi also urged European leaders governments to “intensify” their efforts to create more growth-friendly fiscal policies and called for the “swift and effective implementations of structural reforms” to underpin the recovery.

 

Euro is currently being traded around 1.0630 level. Pair is likely to find support around 1.0580 area and resistance above 1.07 handle.

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