Quantitative Unease

The Devil Is in the Details

The spotlight is on the European Central Bank, whose Frankfurt headquarters are shown above. Source: picture alliance / DPA
The spotlight is on the European Central Bank, whose Frankfurt headquarters are shown above.
  • Why it matters

    Why it matters

    Quantitative easing will likely define the ECB in 2015 – the most drastic step taken yet by the central bank to save the euro zone from the dangers of deflation.

  • Facts

    Facts

    • Most analysts expect the ECB to launch a U.S.-style quantitative easing program as early as January 22.
    • Inflation in the 19-nation euro zone could enter negative territory in December, down from 0.3 percent in November.
    • The ECB would be the last of the world’s major developed-world central banks to launch a quantitative easing program.
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    Audio

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Draghi-Reuters
Rushing towards the next ECB move. Source: Reuters

 

For those who still had their doubts, Handelsblatt’s interview last week with Mario Draghi seemed to end them: quantitative easing is coming to Europe.

The European Central Bank’s president fired up the expectations of financial analysts and investors that such a program, which would involve buying hundreds of billions of euros in government bonds, could be announced as early as January 22, the date of the Frankfurt-based central bank’s next meeting.

Mr. Draghi pointed to a dangerous spiral of falling prices and falling demand for goods in the euro zone currency bloc, which since the start of this year counts 19 countries among its members. “The risks of not fulfilling our mandate of price stability are in any case higher than they were six months ago,” he said, adding that the central bank has already begun “technical preparations” for its next move.

“Mr. Draghi’s comments lead us to believe that the ECB will announce a bond buying program at its next meeting,” Ulrich Leuchtmann, an analyst with German bank Commerzbank, told Handelsblatt.

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