The European Central Bank is on the verge of quantitative easing in order to combat low inflation, weak GDP growth, and unemployment which have driven the EU into a grinding recession. A decision by the bank is expected early next year.
The bank is planning a “non-standard” monetary policy which will purchase bonds and asset-backed securities, including sovereign debt, but not gold. It is very similar to the US stimulus scheme for easing the money supply.
ECB President Mario Draghi said the Governing Council will reassess the monetary stimulus package“early next year.” The bank will also expand its balance sheet to €3 trillion, similar to 2012 levels.
The bank has waited until the very last hour to pull the trigger on QE, not because the economy doesn’t need it, but because of dissent from central bank governors and ECB executive board members.
Germany, the region’s largest economy, has staunchly opposed a decision to print money, as it believes the program infringes on an individual nations’ monetary policy.
Inflation fell to 0.3 percent down from 0.4 percent from last month. It has been rapidly dropping since it peaked at 3 percent in late 2011. The ECB still retains a 2 percent inflation target goal.
The bank left interest rates unchanged at 0.05 percent, a record low, after cutting rates to rock-bottom levels in September. Draghi said they had hit “the lower boundary.”