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The European Central Bank just called time on its $3 trillion stimulus programme

Mario Draghi

  • European Central bank announces the end of quantitative easing from December 2018.
  • The central bank has undertaken an unprecedented programme of stimulus since the eurozone debt crisis.
  • Interest rates remained unchanged at the ECB's June meeting.


The European Central Bank announced on Thursday that it will bring to an end the €2.5 trillion ($3 trillion) bond buying programme it has undertaken since the eurozone debt crisis.

Bond purchases are currently running at a maximum of €30 billion ($35.3 billion) per month, but will be lowered to €15 billion ($17.65 billion) per month from September, before being completely stopped at the end of December.

"The Governing Council anticipates that, after September 2018, subject to incoming data confirming the Governing Council’s medium-term inflation outlook, the monthly pace of the net asset purchases will be reduced to €15 billion until the end of December 2018 and that net purchases will then end," the ECB said in a statement.

Elsewhere, the central bank left its interest rates unchanged, meaning a deposit rate of -0.4%.

It said that it expects rates to remain at their current levels "at least through the summer of 2019" adding that rates will stay put "as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path."

The euro slipped a little against the dollar on the news, falling around 0.35% on the day, to €1.1751 as of 1.00 p.m. BST (8.00 a.m. ET), as the chart below shows:

Screen Shot 2018 06 14 at 12.58.36

Market reaction was reasonably subdued, largely down to the widespread expectation that the ECB would call an end to QE on Thursday.

"For the first time in a long time, the statement accompanying the interest rate (non)decision is altered significantly compared to the April statement. As expected, the central bank is signalling an end to QE later this year via a three-month taper, albeit with an optionality to change position if the data deteriorates," Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics said in email.

At 1.30 p.m. BST (8.30 a.m. ET) the ECB's president, Mario Draghi, will take questions from the media. to discuss the bank's decision.

The ECB shifts its policy meeting from Frankfurt to a euro zone capital once a year and Thursday's gathering is being held in Riga. 

SEE ALSO: The European Central Bank is on the brink of ending its $3 trillion crisis-era stimulus programme

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