ECB’s Draghi says Prep Work on QE has Intensified

The European Central Bank is accelerating plans to unleash fresh growth-boosting measures as the eurozone’s recovery loses steam and the risk increases of a geopolitical shock from the Ukraine crisis.

Mario Draghi, president of the ECB, said that the Bank had “intensified preparatory work” on quantitative easing as a potential new weapon in its battle against deflation and economic stagnation.

He revealed that the eurozone’s policymakers were closer to using QE – which would inject cash into the eurozone by acquiring assets such as bonds from financial institutions – amid worrying signs that weak growth in the 18-member currency bloc is slowing further still.

“The recovery remains weak, fragile and uneven. In recent weeks, the data shows growth momentum is slowing down. It is quite clear that if geopolitical risks materialise, the next two quarters will show lower growth.”

Recovery in the region is barely established, with GDP increasing by only 0.2% in the first quarter of the year.

Speaking at a press conference in Frankfurt, Draghi said sanctions and counter sanctions between the west and Russia were among the biggest risks facing the eurozone economy, with the potential to drive energy prices higher and depress exports. He stressed it was too early to say what the precise impact sanctions would have on the region.

“We are just at the beginning. We are still assessing what impact sanctions might have on the economy.

via The Guardian

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