ECB’s Draghi prepared to increase QE

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ECB president Mario Draghi says he is prepared to increase the size or extend the length of its asset purchase programme if needed, as the central bank keeps rates on hold in its latest monetary policy announcement.

Net asset purchases, at the current monthly pace of €60bn, are intended to run until the end of this year.

The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0 per cent, 0.25 per cent and -0.4 per cent respectively.

Draghi highlighted the optimistic tone of European data, says Antoine Lesné, EMEA head of ETF strategy at SPDR ETFs.

However headline inflation rates have started to roll over in May and core inflation continues to hover around 1 percent,” Lesné says, adding: “The positive performance of risky euro assets may continue as long as the term ‘taper’ is not uttered too loudly.”

David Zahn, head of European fixed income at Franklin Templeton, believes accommodative monetary policy could extend into 2019.

“Political volatility is still a big market theme in Europe, and many events are still on the horizon, from Brexit, the French Parliamentary elections, the German elections and an on-going reform in Italy.”