ECB is Set to End its Massive Bond-Buying Scheme
After more than three years of purchases of €2.6 trillion of government and corporate bonds, the European Central Bank is expected to announce on Thursday that it will end its quantitative easing (QE) program. The asset purchase program was launched in March 2015 to prevent sub-zero inflation from further hitting an economy still reeling from the Eurozone debt crisis.
Under QE, the ECB's balance sheet has ballooned to about 4.65 trillion euros. That's more than doubled since the start of 2015 and is second only to the Bank of Japan, which has pumped money into its economy for years to fight deflation. Having hit a peak of 80 billion euros a month in 2016, asset purchases have slowly fallen with monthly bond buys at 15 billion euros in the final quarter of 2018.
The QE program has lifted economic growth while wages and lending have risen but inflation remains subdued. Meanwhile, annual wage growth hit 2.5% in the third quarter, the highest since 2008 and marked the fourth straight quarter of rises.
Having fallen after the QE launch, the euro has risen on a trade-weighted basis since 2016 due to a stronger economy. The impact on stock markets has been mixed. European markets rallied before the start of QE but are well off peaks hit in 2015.