Not even a glitterbomb can rain on Draghi’s QE parade
15th April 2015 By: Ranko Berich
ECB Press Conference – 15/04/15
The ECB press conference may have begun with a scene in the form of a protestor throwing confetti, but Mario Draghi recovered quickly to take centre stage and confidently assert to markets that his QE plan was working, and not going anywhere soon.
The ECB president has made it absolutely clear that QE will remain in place despite short-term fluctuations in data. Inflation expectations were falling through most of 2014, offsetting the successive cuts in nominal interest rates. Likewise, inflation expectations in the Eurozone have now recovered, giving Draghi proof that the programme is having its desired effect and has been successful in lowering real interest rates.
With inflation expectations recovered and nominal rates even lower, the next step is improvements in lending and confidence. Draghi will no doubt be pleased to see that, despite his detractors, that’s exactly what’s happening.