S&P Truths

Backing the ECB's Big Bazooka

Paul Sheard Chief economist at Standard and Poor s Source Bloomberg 43222455
Paul Sheard, chief economist at rating agency Standard & Poor's.
  • Why it matters

    Why it matters

    The ECB’s policies are working and will still be key to getting Europe back on its feet, Mr. Sheard argues.

  • Facts


    • The ECB launched its €1.14 trillion, or $1.21 trillion, bond-buying program in March. It has already bought more than €60 billion worth of bonds.
    • The euro has fallen sharply against the dollar since the program’s launch, from about $1.15 at the start of March to $1.05 today, which is helping European exporters.
    • The ECB has said it will continue the program until at least September 2016, and in any case until inflation in the 19-country euro zone returns to a target of ‘close to but below’ 2 percent.
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Paul Sheard has a clear view of what the European Central Bank should be doing, and it’s not the same as Germany’s. The chief economist of the global rating agency Standard and Poor’s warns that anyone saying the ECB’s €1.14 trillion, or $1.21 trillion, bond-buying program isn’t working, or should be stopped earlier, was probably against it from the beginning. In an exclusive interview, he urges markets and economists to give the ECB’s policies time to work.


Growth in the Eurozone economy has picked up recently. How much is that due to the ECB’s decision to launch quantitative easing, or QE?

I think it is definitely an important factor. The QE-decision is the culmination of a series of quite radical steps by the ECB, starting with the introduction of negative deposit rates. This regime shift in monetary policy already started in June 2014. So there is a positive influence on growth in the euro zone. We have just upgraded our growth forecasts for 2015 and 2016.

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