Euro plunges as Mario Draghi and ECB curbs money printing

Thursday, October 26, 2017
By Paul Martin

The Euro plunged today as the European Central Bank (ECB) only hesitantly pulled the plug on its money printing programme.

By REBECCA JONES
Express.co.uk
Thu, Oct 26, 2017

The ECB announced an end to quantitative easing (QE) on Thursday afternoon, as bank President Mario Draghi stepped up to deliver the final act of his career before stepping down next October.

Touted as one of the biggest market events of the week, Draghi halved the value of ECB bond purchases – which flood the European financial system with cheap money – from €60 million a month to €30 million a month, starting from January and ending around September next year.

The Euro slid against the US dollar on the announcement – down 0.9% per cent to €1.1710 in late afternoon trading, exacerbated by strong labour data out of the US fuelling speculation of an interest rate rise at the Federal Reserve.

The euro also slid 0.2 per cent against the pound to £1.1248, 0.3 per cent against the Swiss franc to €1.1653 and 0.8 per cent against the Japanese Yen to $0.0075.

Both the US Federal Reserve and UK’s Bank of England began money printing soon after the financial crisis in 2009, which led to a faster recovery in both regions.

The US began tapering its $1 trillion QE balance sheet in 2013, winding it up completely in February this year. The UK is yet to start reeling in its £435 billion programme, having expanded it in August 2016 while cutting interest rates to their current level of 0.25 per cent to support growth.

Speaking to press, Draghi said that while he expects QE to end in Europe in September 2018, he expects QE in Europe to end in September 2018, however he added that this was dependent on continued economic growth and a pick up in inflation, which has remained stubbornly below the Bank’s 2 per cent target for some time.

“We will lower our asset purchase programme to €30 billion from January 2018 and will continue until September 2018 – or beyond. If the outlook becomes unfavourable then we will extend our programme in size or duration,” he said.

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