ECB Avoids Taper Tantrum by Using Cautious Language

Europe’s massive stimulus program is slimming down.

The European Central Bank announced Thursday that it will reduce the scale of its bond buying program in January 2018.
As part of the program, which began in March 2015, the ECB has been purchasing €60 billion ($71 billion) worth of government bonds and other assets each month. Starting next year, the buys will be slashed to €30 billion ($35 billion) per month.

However, the central bank also said the purchases would continue at that pace deep into 2018. The bank indicated the program would run at its reduced level until at least September — but longer if needed.

The program — a form of quantitative easing — has helped support the economy by keeping borrowing costs low for households and businesses. That, in turn, has increased spending and helped spur economic growth.
Investors reacted to the bank’s announcement by pushing the euro lower. Stock markets remained in positive territory.

via CNN

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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