ECB Mario Draghi Defends QE Program

European Central Bank head Mario Draghi again defended the ECB’s bond-buying program Tuesday, saying the crisis backstop was more important now following recent market turbulence sparked by other central banks around the world.

Draghi said in a speech in Berlin that the offer to buy bonds issued by indebted countries “is even more essential now as we see potential changes in the monetary policy stance, with associated uncertainty, in other jurisdictions of the global economy.”

The U.S. Federal Reserve has roiled markets by indicating it could taper off its emergency stimulus measures next year. The Fed has been buying longer-term bonds in the open market, which drove down long-term interest rates and sent stocks and bonds higher.

Meanwhile, Chinese authorities have tried to rein in excessive lending, leading to a spike last week in interbank borrowing rates. Japan has also said it will add large monetary stimulus. Draghi did not mention any central bank by name.

Draghi said that the ECB’s exit from its own stimulus measures “is still distant, since inflation is low and unemployment is high.”

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza