why is the ECB launches a new stimulus package?
The trade war and the global economic slowdown is what has led, according to Draghi, to take the decision. The forecasts of growth and inflation for the euro area are shrinking. However, the president of the ECB has highlighted the strength of the services sector and construction activities that are resisting thanks to a "favourable funding conditions".
Have you complied with the expectations of the markets?
It has been slightly below, but leaving the door open to more short-term measures and maintaining the tension and expectations.
What does it mean for the banks?
from now on, they will have to pay more for to leave your money in the accounts of the ECB, a 0.5% that could reach 0.6% at the end of the year. The ECB wants to move the money, to lend or invest, and penalizes you to keep it safe.
how long will the low rates?
The ECB has reinforced its future orientation ("forward guidance") to ensure that rates will remain low for a long time. "The governing Council now expects rates to remain at their present level or lower until the inflation outlook converges robustly to a level sufficiently close to but below 2% within the horizon of their projections, and such convergence has been reflected consistently in the underlying dynamics of inflation," announces the council.
why is this controversial new program to buy debt?
Some members of the governing council of the ECB, as the president of the German Bundesbank, Jens Weidmann, did not consider it necessary, and fear that the peripheral states will continue to sobreendeudándose, as well as the impact on the inflation at the time that the economic situation is normalized.
what, Then, since there's no expectations of rate increases?
A change in the formulation of the statement of the ECB announces that zero rates are here to stay. "The governing Council now expects the ECB interest rates will continue at their current levels or lower until they appreciate that the prospect of inflation converges robustly to a level close to, but below 2%", says the text, which means that the first rise will not occur from mid-2020, as the agency claimed until now, but that is postponed sine die the perspective of the climbs.
Updated Date: 13 September 2019, 22:00