ECB delivered a bazooka today - ANZ

Analysts at ANZ explained that the ECB delivered a bazooka today. 

Key Quotes:

"Any thoughts of tapering have been crushed, and we expect further EUR weakness, and continued portfolio outflow from Europe. In terms of specifics, the ECB extended QE (by €540bn), allowed the purchase of bonds with a minimum one year maturity and the purchase of bonds with yields below the deposit rate (-40bps). 

While initial headlines focusing on the asset purchase program being reduced from €80bn to €60bn were viewed as hawkish (and saw EUR spike higher), taken in the context of the length of the program extension (an additional 9 months) it was quickly seen as a dovish policy action. 

Beyond this, the ECB is now able to purchase paper with yields below the deposit facility (-0.4%) causing a rally in front end yields; and the purchase program appears open ended, with the option to increase and/or extend as needed. The ECB did not discuss tapering and Draghi noted that they wanted to signal to the market they would have a “sustained presence” in the bond market. So – that's it from Mario for 2016. He has ended the year on a high. 

The recovery is modest, but broad based and well under way. Headline inflation is picking up slowly and deflation has been averted. He's managed to engineer a very significant easing to support growth in what is going to be a year of political angst. Well, that’s the plan anyway!