Search Results for QE

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“NCB risk bearing should be traded-off against a big QE”

MADRID | By Ana Fuentes | Hours before ECB’s president Mario Draghi unveils its big easing program, we spoke to think tank Bruegel central banks’ expert Silvia Merler about an eventual national risk bearing. It could be a way to make QE more acceptable by Germany, she believes, although “it should be traded-off against a significant size” (meaning more than the €50bn purchases per month some market watchers are talking about).



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QE and OMT are not the same thing

PARIS | By Francesco Saraceno | I think it is important to clarify once more that QE and the OMT (welcome to the wonderful world of EU acronyms) are not the same thing. If Mario Draghi manages to rally the Governing Council behind him, QE will consist of a vast program of sovereign bond purchases, in order to try to lift the European economy out of deflation. A European version in short, of what was done three years ago by the Fed and other major central banks in the world.


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EU Court’s green light for QE

MADRID | By J.P. Marín Arrese | In the OMT case brought before the EU Court of Justice by the German Constitutional watchdog, the Advocate General has delivered a positive opinion. As the Court usually follows such opinions, the last hurdle for implementing the planned QE has been lifted. Yet, the Advocate General sets a number of requirements that will curtail the ECB’s room of manoeuvre.


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Eurozone: Deflation and weak activity support QE

LONDON | Barclays analysts | We believe this week’s data on inflation and economic activity have provided more arguments to step up ECB’s asset purchase programmes by including EGBs on 22 January, which is our baseline scenario. Inflation entered negative territory in December and is likely to stay negative for a few months before a weaker euro improves the inflation and growth outlook.


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Don’t call QE something it’s not

MADRID | The Corner | ECB staff members have presented models for buying as much as €500 billion ($593 billion) of investment-grade assets, mostly sovereign bonds, according to sources close to the Governing Council. This will amount to an incomplete, partial solution according to some analysts. “It looks like a lot of money, although it won’t be enough” to expand the lender’s balance sheet by €1Tr as is planned, said Alberto Vigil of Barclays on Monday.


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The Fed will almost certainly fail the next QE

SAO PAULO | By Benjamin Cole via Marcus Nunes’s Historinhas | The results are in, and it appears the Fed’s use of QE—faltering, dithering, at times mindlessly circumscribed in advance—was moderately successful in helping the U.S. climb out of recession. Europe is still mired in econo-gloom, courtesy of the ECB’s monetary noose around its neck. Japan may only now be fighting its way out of perma-gloom by way of aggressive QE. The U.S., in contrast, has posted slow growth since the end of the 2008-09 “great recession”.


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“People forget that QE is a Japanese innovation”

MADRID | By Ana Fuentes | In a blow to PM Shinzo Abe, the Japanese inflation rate fell to its lowest level in over a year in November (0.7% from a 0.9% rise the previous month, according to government data released Friday), complicating efforts of the central bank to end more than a decade of chronic price falls. Does this mean, as stimulus sceptics put it, that the Abenomics are doomed? Advisor to the new government and one of the 100 Most Influential People for Japan according to Nikkei Business, William H. Saito believes we have been quick to judge their strategy. As he explained to me, they have “many plan B’s left.”

 


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What if QE operates on the supply side and keeps prices low?

WASHINGTON | By Pablo PardoDo you want a Who’s Who of the Republican talking heads? If so, go to this list. Those are the luminaries that asked the Federal Reserve not to go ahead with the Quantitative Easing in 2010, for fear of inflation and currency debasement. Four year later, inflation is nowhere to be seen, and, according to the IMF, the US dollar has strengthened its role in the monetary system. 


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How would broader ECB QE impact the UK?

LONDON | UBS analysts | UBS expects the ECB to widen its asset purchase programme to include corporate, parastatal and sovereign bonds on 5 March 2015. Our base case is for €1 trillion of sovereign bond purchases to be undertaken over a two-year time horizon. In this note, we examine how a broadening of the ECB’s QE programme is likely to impact the UK economy and sterling-denominated asset classes.