Investors Await ECB QE to Trade European Assets

Global investors are waiting with bated breath this month, as an expected 60 billion euros ($67 billion) is set to flood the euro zone’s economy, in a move which has already caused record inflows into stock markets and severe distortions in fixed income.

The European Central Bank (ECB) plans to expand its balance sheet by as much as a trillion euros in total in an effort to combat the current environment of low growth and deflation – when consumer prices fall instead of rise. A spokesman for the central bank told CNBC Monday that there was no formal start date for the bond-buying – also known as quantitative easing (QE) – program, but that it was expected to start sometime in March.

Mohamed El-Erian, chief economic adviser at Allianz, said he believes the central bank might even look to expand the program further.

“I suspect over that next year we’re going to see this QE evolve. We’re going to see a bigger set of instruments being bought by the ECB as it continues, unfortunately, to be the only game in town,” he told CNBC at the Global Financial Markets Forum in Abu Dhabi.

via CNBC

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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