By a broad consensus, the ECB Governing Council decided to reduce the monthly pace of asset pur-chases (Quantitative Easing, QE) from EUR80bn to EUR60bn starting in April 2017 and to maintain it until December 2017. Overall, this means an extension of the QE program for 9 months by EUR540bn in total. This decision was contrary to expectations of an extension for 6 to 9 months at the current pace. The decision has been justified by three reasons: (i) the risk of deflation has largely waned com-pared to when they announced the rise of the amount back in March 2016; (ii) an increase in inflation expectations; (iii) indications of a stronger global recovery after the relative resilience post surprises (Brexit, Trump, and result of the Italian referendum). The ECB also announced an extension of the securities’ perimeter to sovereign and corporate bond purchases with yields below the ECB deposit rate (-0.4%) and of lower maturities (lower bound of 1 year instead of 2 years). The ECB acknowledged a still subdued inflation outlook, +1.3% in 2017 and +1.5% in 2018, in the context of moderate GDP growth, +1.7% in 2016 and +1.6% in 2018. At the same time, Mario Draghi said that should the eco-nomic outlook deteriorate, an increase in the amounts or the duration of the QE program will be likely.
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