Draghi’s Trillion-Euro Journey Starts Today
Mario Draghi’s trillion-euro journey is under way.
The European Central Bank will announce the result of its first targeted lending program today as part of its effort to stave off deflation in the euro area.
Draghi’s first step may not take him very far, with estimates for today’s offer, which is linked to the size of banks’ loans to the real economy, ranging from 100 billion euros to 300 billion euros.
A relatively low take-up “is likely to raise further questions over the feasibility of the ECB’s goal,” said Martin Van Vliet, senior economist at ING Groep NV in Amsterdam.
Lenders may prefer to hold off until the end of the ECB’s review of their balance sheets, according to Van Vliet.
The TLTRO program, announced in June, is intended to spur the supply of credit to the real economy to help price gains. A total of eight operations will be conducted through June 2016. The purchase programs for asset-backed securities and covered bonds were announced this month, with details to follow after the Oct. 2 meeting of the Governing Council.
In contrast, the U.S. Federal Reserve yesterday tapered its monthly bond buying to $15 billion in its seventh consecutive $10 billion cut, staying on course to end the program in October as the economy recovers.
Source: bloomberg- Draghi’s Trillion-Euro Journey Starts Today
