Several months ago, the European Central Bank launched a program to purchase more than €1 trillion in bonds, mostly government debt, known as quantitative easing. Now the time is ripe to sum up the first results. ECB officials affirm that QE has made progress. Indeed, the eurozone’s economy has been getting into gear, lending activity has been reviving. The most important, QE has prevented the economy from sliding into recession. European Central Bank President Mario Draghi assured investors that the regulator’s vast stimulus efforts will remain in place “as long as needed” and QE will not be phased out before the targeted September 2016 end date. “While we have already seen a substantial effect of our measures on asset prices and economic confidence, what ultimately matters is that we see an equivalent effect on investment, consumption and inflation,” the ECB president said. Mr. Draghi made this statement in response to speculations that the benign effect of QE had exhausted itself in regard to bonds, stock indices, and currencies. Looking back on similar programs, asset purchases seriously undermined liquidity. Ongoing QE in the eurozone is no exception. A lot of financial institutions have already noted lower liquidity on the debt market. Nevertheless, the ECB is ready to complete its program of money printing in full. “We will implement in full our bond purchase program as announced and, in any case, until we see a sustained adjustment in the path of inflation,” the policy maker stated.
