QE program unveiled for Eurozone

The European Central Bank (ECB) recently took a policy leap by launching its own Quantitative Easing (QE) program – a bond purchasing policy to inject new money to revive the Eurozone’s economy. Will it work? Leon Perera, Chief Executive Officer of Spire Research and Consulting shared his insights in The Business Times – Views from the top section on the effectiveness of the QE program.

With the launch of the QE program, the ECB hopes to boost economic growth and check deflation. This will be achieved through the purchase of both government and private sector bonds worth €60 billion from March 2015 until September 2016.

Perera commented that, while better than nothing, the ECB’s QE program is small in comparison with the scale of the problem facing Europe. It will most likely have to be increased and sustained for some time before any results are seen.

Moreover, the ECB runs the risk of trading short-term quantity for long-term quality of growth. This is due to the reduced pressure on governments to set their fiscal and competitive agenda in order. However given the threat of deflation becoming entrenched, this is a risk worth taking.

It remains to be seen whether the QE program will succeed in reviving the Eurozone’s economic fortunes.

https://www.spireresearch.com/newsroom/media/qe-program-unveiled-for-eurozone/

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