Europe On The Brink: €1.1 Trillion Bazooka & Greek Elections

Europe On The Brink: €1.1 Trillion Bazooka & Greek Elections
  • ECB to buy €60bn/month in assets
  • Purchases will be conducted "until we see a sustained adjustment to path of inflation"
  • Purchases to last until September 2016
  • ECB rates have reached lower bound
  • Sees sizable increase in ECB's balance sheet
  • Eurozone risks on the downside
  • Annual inflation is expected to remain very low or negative in months ahead
  • Volume of QE is in ballpark of getting ECB's balance sheet ti levels of early 2012
  • There has to be a program to buy GGBs; there is also an issuer limit
  • Don't have any special rule for Greece
  • Will buy bonds with negative yield

A quick take: Slightly more than expected per month, with a slightly shorter duration than expected, amounting to just about €1.1 trillion over 16 months, which is a tad on the low side to the super-aggressive expectations of €1 trillion per year. Furthermore, as expected there will be partial risk-sharing. It is still unclear what are the embedded conditions regarding purchasing Greek or other "risky" bonds.