In its latest attempt to boost economic activity in the European region, the President of the Euro Central Bank (ECB), Mario Draghi, has announced new measures. This includes its own version of the QE program, something other developed nations such as US and Japan resorted to; to provide a fillip to their respective economies. This development seems to have come at a time when the central bank does not have many monetary policy options; given that interest rates stand at 0.05% (benchmark rate) after being reduced by ten basis points. Deposit rates stand at minus 0.2%, indicating that the spending is being encouraged.
In the attempt to boost the economy and push in more capital in the system, the central bank is as such looking to purchase bonds of about 700 bn Euros or US$ 906 bn. However, as reported by Bloomberg, a full-fledged QE plan was not announced given the split in views amongst the members of the Governing Council. Nevertheless, what this could possibly mean is over time, such capital could find its way to chasing higher returns. What is concerning is that this would add to the already existing bubble scenarios that are being witnessed in various parts of the world.
In the attempt to boost the economy and push in more capital in the system, the central bank is as such looking to purchase bonds of about 700 bn Euros or US$ 906 bn. However, as reported by Bloomberg, a full-fledged QE plan was not announced given the split in views amongst the members of the Governing Council. Nevertheless, what this could possibly mean is over time, such capital could find its way to chasing higher returns. What is concerning is that this would add to the already existing bubble scenarios that are being witnessed in various parts of the world.
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