Euro­pean Cen­tral Bank stim­u­lus plan meets 1st month goal


The Euro­pean Cen­tral Bank’s 1.1 tril­lion euro (US$1.2 tril­lion) stim­u­lus pro­gram is off to a run­ning start.

The cen­tral bank said Tues­day it has met its monthly goal of pur­chas­ing 60 bil­lion eu­ros in gov­ern­ment and pri­vate-sec­tor bonds, the first stage of an ef­fort that is to last into next year.

The bond pur­chases, which pump newly printed money into the fi­nan­cial sys­tem, have wide­spread sig­nif­i­cance for mar­kets, in­vestors and the econ­omy. The pro­gram is aimed at rais­ing con­sumer price in­fla­tion from a wor­ri­some neg­a­tive 0.1 per­cent an­nu­ally. It should also sup­port the grad­ual eco­nomic re­cov­ery that has been tak­ing hold, and help re­duce un­em­ploy­ment. The job­less rate for the eu­ro­zone is a high 11.3 per­cent.

The ECB said that since launch­ing the ef­fort March 9, it had bought 52.52 bil­lion eu­ros in bonds is­sued by EU gov­ern­ments or eu­roarea supra­na­tional in­sti­tu­tions such as the eu­ro­zone’s col­lec­tive res­cue fund for trou­bled coun­tries. The 60-bil­lion-euro goal was reached by ad­di­tional pur­chases of pri­vate­sec­tor bonds.

The ECB is the chief mon­e­tary author­ity for the 19 coun­tries that use the shared euro. It has re­cently un­der­lined its de­ter­mi­na­tion to carry out the full amount in pur­chases through Septem­ber 2016 and be­yond if nec­es­sary, even though the econ­omy has shown signs of im­prove­ment.

Ef­fects of the pur­chases be­gan tak­ing hold even be­fore they started, as fi­nan­cial mar­ket par­tic­i­pants moved to an­tic­i­pate them. Key signs in­clude a sharply weaker euro and fall­ing bor­row­ing costs for eu­ro­zone gov­ern­ments. Sur­veys of busi­ness con­fi­dence have im­proved and ma­jor Euro­pean stock in­dexes ral­lied dur­ing the first quar­ter.

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