Eunice Bakr
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Eunice Bakr in Eunice Bakr,

ECB needs outright QE sooner rather than later!

Here's an exerpt from today's Bloomberg's editorial on ECB policy:

"The move to a slightly negative interest rate on banks' deposits at the central bank, a cut in the ECB's policy rate from 0.25 to 0.15 percent, and the extension of an existing refinancing program to encourage bank lending gave investors a lot to discuss but added very little in fresh monetary stimulus. The euro area needs outright quantitative easing, modeled on the successful program that the U.S. Federal Reserve is now winding down.

The case for QE has been compelling for months, and the ECB hasn't entirely ruled it out. In June, it promised to "intensify preparatory work" for a program to buy asset-backed securities. That would be a step in the right direction, even though the ECB doesn't seem to have large-scale Fed-style QE in mind. Starting QE in a small way would be better than not starting it at all. One way or another, it's time the ECB's preparations yielded an explicit change in policy."