ECB Lifted QE to Boost Prices

The ECB revealed a number of measures to combat too-low inflation, ranging from a cut in the floor for interest rates to an expansion of its bond-buying program by at least 360 billion euros ($390 billion).

The Frankfurt-based ECB will extend quantitative easing by six months until at least March 2017 at the current rate of 60 billion euros a month and broaden the assets purchased to include local and regional debt, ECB President Mario Draghi said on Thursday. The Governing Council earlier reduced its deposit rate by 10 basis points to minus 0.3 percent.

Investors reacted with skepticism at the scale of the package, sending the euro up as much as 2.6 percent and equities and government bonds down. Draghi said the ECB is “willing and able” to act further if needed. QE is now intended to total at least 1.5 trillion euros, up from the original 1.1 trillion euros.

“Today’sdecisions were taken in order to secure a return of inflation rates that are below or close to 2 percent and therefore to anchor medium-term inflation expectations,” Draghi said at a press conference in Frankfurt, after thecentral bank cut its deposit rate by 10 basis points to minus 0.3 percent. “Weare doing more because it works.”