The ECB’s risky crossing of the Rubicon | European Voice.
Eurozone monetary officials are expected to make history when they gather for the European Central Bank’s next policy-setting meeting on 22 January. Observers expect that Mario Draghi, the president of the European Central Bank (ECB), and his colleagues will finally cross the Rubicon and announce the launch of a large-scale programme of quantitative easing (QE) – in other words, high-volume purchases of government bonds.
Although the ECB has resisted QE for more than five years, even as other major central banks embraced it, Benoît Coeuré, a member of its executive board, has already called it the “baseline option”.
On the face of it, the ECB has many reasons to launch QE. For two years, inflation has consistently failed to reach the 2% target. In November, the annual price growth was just 0.3%, while the recent collapse in oil prices will generate further downward pressure in the coming months. Even more important, inflation expectations have started to de-anchor: forecasters and investors expect the undershooting of the target to persist over the medium term.
