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What Will ECB Do With Their QE Program


What Will ECB Do With Their QE Program

The European Central Bank (ECB) now becomes the main attention of the investors. The main reason is the ECB’s program that gives the monetary stimulus, the Quantitative Easing (QE) program. This program has providing the “help” when the debt crisis hit the Europe. We can say that QE program is one of the reasons why many countries and companies in Europe can survive during the crisis. However, there is theory that the QE program will be ended soon. This is what makes investor pay attention to the ECB decision for the next few weeks. They are waiting, if ECB will extend or stop their program.

There is hope that the QE program will be continued. However, by looking at the condition of the Europe economy last year, especially from the growth level and inflation rates, there is big chance that the QE program will end in September, or the month when the program is expired.

However, some analyst sees some chance that ECB will be extended this program. By looking at the Euro area for past few weeks, they come into conclusion that this program can still be applied. More than that, the lower retail sales as well as industrial production numbers also become the important factor that support that analyst. According to Bill Blain, strategist and head of capital markets as Mint Partners, there is possibility that the extension of QE will be conducted this year. But, it depends on several factors. The main factor is PMI (Purchasing Managers’ Index). The data from this source will describe the market condition. If the data shows there is strength in market that will lead to recovery, the ECB will mostly extend the program. However, if the weak data come up from that, Blain said that ECB will mostly wait and see the situation.

Last April at press conference regarding QE program, Mario Draghi, the ECB President didn’t give any information or clue about the continuation of that program. Therefore, there is chance that QE will be stopped. Bert Colijn, senior Euro zone economist at ING also said that the latest data about Euro condition also give some problem to ECB to continue QE program. ECB can’t move recklessly with the current data. However, we can still wait until July to see the clearer information and data that will show what ECB will do on their program that give 30 billion Euro incentive per month.

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