12 Jan 2015
Buying sovereign bonds is the most effective means – ECB’s Visco
FXStreet (Mumbai) - The European Central Bank (ECB) Governing Council member Ignazio Visco urged for a full-blown QE and also voiced his concerns over deflation in the 19-nation bloc, in an interview with the German Welt am Sonntag newspaper.
Key Quotes:
"If the inflation figures remain very low for too long and the economy hardly grows, we risk being drawn into a downward spiral that will intensify itself on and on - that's what we call deflation,"
"The cheap oil is helping the economy, no doubt. On the other hand it also leads to low prices. And that's a problem when inflation rates are already near zero",
"In this situation, the most effective means is buying sovereign bonds, we are discussing different options in the ECB's Governing Council, also the purchase of other debt such as corporate bonds. But this market is not very big."
"This is a standard tool in monetary policy. We only call it unconventional because it hasn't been used in Europe thus far," he said. "Now we need to deliver -- otherwise (bond) yields will rise again."
Key Quotes:
"If the inflation figures remain very low for too long and the economy hardly grows, we risk being drawn into a downward spiral that will intensify itself on and on - that's what we call deflation,"
"The cheap oil is helping the economy, no doubt. On the other hand it also leads to low prices. And that's a problem when inflation rates are already near zero",
"In this situation, the most effective means is buying sovereign bonds, we are discussing different options in the ECB's Governing Council, also the purchase of other debt such as corporate bonds. But this market is not very big."
"This is a standard tool in monetary policy. We only call it unconventional because it hasn't been used in Europe thus far," he said. "Now we need to deliver -- otherwise (bond) yields will rise again."