ECB: Dovish Taper or Hawkish Ease?
The ECB announced it would extended its asset purchases from April through December next year, but at a modestly slower pace of 60 bln euros rather than 80 bln euros.We had been expected a six-month extension but without tapering. This would have added 480 bln euros and instead what the ECB will buy is 540 bln euros. The ECB will also expand the range of maturities it buys, and will allow the purchases of instruments yielding less than the minus 40 bp deposit rate.The end date remains soft in the sense that asset purchases will continue until the Governing Council sees substantial adjustment in inflation toward the central bank's target. The staff forecasts warn of risks of a further extension of the bond buying. In its new forecasts that go out until 2019, the staff does not see inflation above 1.7%. In fact. forecasts 2017 inflation at 1.3% from September's 1.2%. Inflation in 2018 is now expected to be 1.5% instead of 1.6%. Draghi was clear on this point: The 2019 staff forecast "isn't really meeting the goal."...MORE
The euro sure looks as though it's going under par in 2017, 1.0661 last: