The European Central Bank is ready with a bond
acquisition program worth 550 billion-euro or $635 billion.
According to economists, this is set for the week
although details may not be available right away.
The ECB is decided to guide the region from
deflation with quantitative easing on January 22. The median forecast beats the
500 billion euro model presented to central bank officials.
The target of the central bank’s governing council is
to persuade investors that it has a plan that can strengthen the declining economy.
Speculations about these plans have sent the single currency euro to an 11-year
trough with fund flows possibly playing a factor in the SNB’s decision to terminate
the cap on the Swiss currency.
Dropping crude oil prices tipped the inflation rate
below in Europe to less than zero for the first time in over five years.
Policy makers claimed in media statements and
speeches reactions especially in Germany where there has been strong criticism versus
quantitative easing.
The central bank of Germany maintained that
while inexpensive energy affects inflation in the short-term, this stimulates
the economy as well.
Many economic analysts predicted that the ECB will declare
an absolute purchase size. Monthly purchases can go on for a prearranged period
or until after inflation is just below two percent.
Consumer prices dropped to 0.2 percent (annually)
in December of 2014.
The ECB chair plans to expand the central bank’s
balance sheet to a maximum of three trillion euro by means of asset purchases
and loans f0r banking institutions. The central bank maintains assets of 2.2
trillion euro that can dwindle in the coming weeks as 200 billion euro worth of
crisis credit for banks will be maturing.
There are also plans of limited risk-sharing by compelling
national central banks to acquire the debts of their respective countries, according
to media sources.
