Draghi’s 1,000 billion crashed the euro, but raised the prices of shares


The main program of the European Central Bank (ECB) for buying bonds should strengthen the economy in the Eurozone, but that alone will not be enough, said the director of the International Monetary Fund (IMF), Christine Lagarde, calling on Governments to implement structural reforms.
– It should help, but it alone will not be enough to revive the European economy and spur growth. Deep structural reforms are required in order to help competitiveness – Lagarde said, commenting on the statement of ECB for injecting hundred billion euros in the Eurozone.
European Central Bank yesterday brought a decision without precedent in the history of the Eurozone, expanding the program for buying government bonds and assets in a monthly amount of 60 billion euros. The program will begin in March this year and will last until September 2016. Thus, the total cost of the program exceeded 1.000 billion euros. ECB decided to make this step after previous measures, such as reducing the interest at a record low, lowering the interest of long-term loans, as well as acquisition of assets, didn’t yield the desired results.
– We’ll see if it is effective. Trust is the key. There is a serious risk of very weak inflation or even deflation, against which ECB acts – said Legard.
At the Asian stock markets, price of shares today registered a large increase because investors hope that the new measures of ECB will revive the economy in the Eurozone, while the value of the euro versus the dollar is at its lowest level in 11 years.
– Many believe that this program will not improve things suddenly – says John Kabaly, strategist of company “LPL Financial”.
– Mario Draghi drew a bazooka … The excessive buying bonds by ECB will reduce yields, but inflation expectations will increase them. For now, it seems that markets don’t quite understand what their reaction should be – says the analyst of Credit Agricole Bank David Qiblah, adding that the bond market is currently between hammer and anvil.
At the European stock markets this morning, seventh day in a row, was registered an increase due to the optimism of the new incentives in the Eurozone, while prices of the shares of carmakers increased the most because an increase in their sale is expected.

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