21 Jan 2015
ECB may refrain from announcing a huge purchase program – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team feels that ECB may not announce the expected 500-700 Bln euro purchase program but opt in for a monthly purchase deal of 40-50bln which might be subject to revision at the end of the year.
Key Quotes
“In order to forge a consensus and minimize the risk of political pressure from creditor nations, especially Germany, there were likely several important compromises that may have been worked out.”
“One of the key compromises is the size of the buying program. The ECB has reached an agreement that the balance sheet should grow by about 1-1.2 trillion euros. It will achieve some of that by its current TLTRO and asset purchases.”
“In fairness, the asset purchases and TLTRO have been on the low side. They may conservatively be expected to help expand the balance sheet by 400-500 bln euros by the end of this year. This is why the consensus is for the ECB to buy around 500-700 bln euros.”
“The ECB may not announce such a figure. Instead, it could opt for a monthly figure, say something 40-50 bln a month to be reviewed before the end of the year.”
Key Quotes
“In order to forge a consensus and minimize the risk of political pressure from creditor nations, especially Germany, there were likely several important compromises that may have been worked out.”
“One of the key compromises is the size of the buying program. The ECB has reached an agreement that the balance sheet should grow by about 1-1.2 trillion euros. It will achieve some of that by its current TLTRO and asset purchases.”
“In fairness, the asset purchases and TLTRO have been on the low side. They may conservatively be expected to help expand the balance sheet by 400-500 bln euros by the end of this year. This is why the consensus is for the ECB to buy around 500-700 bln euros.”
“The ECB may not announce such a figure. Instead, it could opt for a monthly figure, say something 40-50 bln a month to be reviewed before the end of the year.”