"The uncertainty that prevails everywhere," said Mario Draghi, the president of the European Central Bank at the press conference on Thursday that followed the announcement of the decision to extend the asset purchase program until the end of next year and move in two of its rules that allow a eligibility more extensive obligations for purchase on the secondary market.
To illustrate the importance of variable uncertainty, Draghi cited the electoral calendar in Europe next year and the lack of knowledge about the consequences of what really will come in 2017 of the three most striking events of 2016 – the Brexit, the winning Trump in the elections of the main economy in the world and the 'no' in the referendum the Italian last Sunday. He underlined, in this respect, that the financial markets have shown, until now, "a resilience that many did not expect".
because of This, the factor uncertainty is the most important, today, to the decisions of prolongation of the program of acquisitions and relaxation of the rules, that the risk of deflation (inflation-negative) that "disappeared". However, Draghi did not recognize that, even in 2019, the forecast of inflation released today by its technicians, remains distant from 2% target of the ECB’s monetary policy. The new forecast of the technical point to 1.7% in 2019. Asked by a journalist whether this meant "below, but close to, 2%", the Italian replied, with emphasis, "no, really". That is, the inflation projections continue to justify an intervention by the ECB to boost the rise in inflation.
The uncertainty in Europe and in the United States, what is happening in the emerging markets and the changes in segments of the mecados financial, require the strengthening of the action of the central banks, and not the other way around, he explained. “It is necessary to continue with the accommodation monetary,” he said. It should be recalled that Germany has been insisting that the policy of tactile stimuli should start a process of reduction.
No tapering no
The president of the ECB repeated several times throughout the press conference, that the reduction in the 20 billion euros the volume of monthly purchases from April is not a sign of the beginning of the process of discontinuance of the program. In 2013, the process of discontinuance of purchases by the american Federal Reserve has been labeled "tapering".
In fact, despite a monthly volume of 60 billion euros of purchases from April, the total of the injection of monetary stimulus in 2017 has a reinforcement of 540 billion euros, higher than the 480 billion that were planned with an extension of six months on a monthly basis superior.
"I Want to say clearly that there is no tapering on the market. We continue to exert pressure on the prices in the market," said Draghi, who said that, in his interpretation, the term north american release in 2013 means a reduction to zero of the monetary stimulus through the purchase programs. That’s not going to happen from April 2017 in the euro zone.
Scrambled in the rules benefit the ones and the others
The meeting of the ECB has also included two important decisions that more flexible course structures the purchase program. The program parameters are changed in two aspects from January 2017. The first amendment was not expected by analysts; the second was desired and expected.
The obligations with a maturity of 1 year shall be included in the purchases on the secondary market. Previously only from a period of 2 years were eligible. What expands the universe of possible acquisitions, and, in particular, may benefit from the peripheral of the euro.
In the second place, the ECB has decided that the obligations with interest the negatives below of 0.4% (range this Thursday the seven members of the euro) shall be eligible "in case of need". What, also, expands the universe of possible acquisitions, and in particular in the economies of the centre, such as Germany, Austria, Belgium, Finland, France and the Netherlands.
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