THE European Central Bank (ECB) has pulled the pin on the quantitative easing (QE) grenade it has been sitting on in a bid to boost the Eurozone’s flagging economy.
It announced it’s to inject billions of euros into the ailing Eurozone by printing money to buy bonds government bonds of the member states.
The ECB has also said Eurozone interest rates are being held at the record low of 0.05%
The ECB will purchase bonds worth €60Bn per month until the end of September 2016 – far more than previously expected, reported BBC Business.
The ECB has also said Eurozone interest rates are being held at the record low of 0.05%, where they have been since September 2014.
ECB president Mario Draghi said the programme would begin in March.
He told a news conference the ECB would be purchasing euro-denominated investment grade securities in the secondary market.
He said the aim was to achieve a “sustained adjustment in the path of inflation”, which the ECB has pledged to maintain at close to 2%.
The Eurozone is struggling for growth and the ECB is seeking ways to stimulate spending hoping that by lowering the cost of borrowing, banks would be likely to lend more to businesses and consumers who then may spend more and create growth.
It is a strategy that appears to have worked in the US, which undertook a huge programme of QE between 2008 and 2014.
The UK and Japan have also had sizeable bond-buying programmes.
