European Central Bank chief economist Peter Praet confirmed that next week’s policy meeting will be crucial for the continuing program of quantitative easing. The decision mediates us when QE will end.
Some analytics say the QE should be already ended in the past years. Maybe it is too late. This institution’s bond-buying program cause bad handle of various economies, because they know that their debt will “somebody buy”. But still better later than never. Now, economic in EU is still going well, but we can notice a smaller slowdown of economy, which is also expected in near future.
Praet also said “waning market expectations of sizable further expansions of our program have been accompanied by inflation expectations that are increasingly consistent with our aim.” In addition, inflation signals “have been improving.”
Ending of QE could make Euro stronger, so maybe after the statement of next week will Euro rise in short-term. It is also bullish signal for traders, but stronger Euro could be threat for weaker countries in the Euro-area like Italy, Spain or Greece.
The ECB currently intends to keep buying debt at a pace of 30 billion euros ($35 billion) a month until at least September and has signaled that purchases won’t end abruptly. Economists largely see the program being tapered to zero by the end of the year, though the proceeds of maturing bonds will continue to be reinvested. Interest rates will be kept at current record lows until “well past” the end of net purchases. Some policy makers have urged the ECB to start the process of reinstating interest rates as the primary tool after more than three years of unconventional support. Executive Board member Sabine Lautenschlaeger said last month that June might be the month to decide “once and for all” to gradually conclude net asset purchases by the end of this year, according to the Bloomberg.com