ECB gives itself more room to buy bonds

European Central Bank president Mario Draghi has announced a change to the ECB quantitative easing programme. Amendments to the QE programme, on the back of reduced 2017 GDP and inflation forecasts, give the ECB more flexibility to continue the asset (bond) purchase programme without running into roadblocks such as the 25% security issue limit (which has now been raised to 33%). It also sends a signal the ECB is prepared to do more if European growth and inflation figures don’t meet ECB expectations. The ECB president said the programme may continue past the original scheduled finish of September 2016. Talking about the pace of recovery and inflation he said, “Taking into account the most recent developments in oil prices and recent exchange rates, there are downside risks.” He noted European inflation figures may end up being negative but the circumstances would be “transitory” and due to oil price falls.