March 20, 2019

European Central Bank announces end of quantitative easing

The European Central Bank (ECB) today announced the end of its quantitative easing bond purchases.

In a press release today the ECB said it will reduce the pace of asset purchases from €30bn (£26.4bn) per month to €15bn from September to December.

At the end of December, "net purchases will then end", the statement said.

The ECB also changed its guidance on the future path of interest rates; it left the rates unchanged, but said this will continue "at least through the summer of 2019", a more definite time period than previously given.

The central bank defied concerns over political uncertainty in Italy and the threat of an escalation in a trade war in an announcement which will be seen as a symbolic moment in the drawn-out recovery from the financial and Eurozone sovereign debt crises.

The ECB emphasised that the end of the programme will be "subject to incoming data", and that the stock of government and corporate bonds owned by the bank will remain steady "for an extended period of time" to avoid a sell-off.

Investors had been awaiting guidance on the future of the asset purchase programme, QE, after chief economist Peter Praet last week said that policymakers at the meeting would discuss the future of the programme.

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