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Draghi hails ECB's QE 'shield'

Wednesday, March 11, 2015 - 02:21

The ECB's bond-buying programme may be shielding the euro zone from the effect of events in Greece, says bank President Mario Draghi. As David Pollard reports, it's also keeping the euro at 12 year lows.

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The ECB under scrutiny. Not just what markets are subjecting it to, since a departure into radical new territory - quantitative easing. But also the theme at this conference in Frankfurt. A platform for Mario Draghi to sing the bank's own praises. (SOUNDBITE) (English) ECB PRESIDENT, MARIO DRAGHI, SAYING: "We can deploy and are deploying monetary policy in a way that can and will stabilise inflation in line with our objective." The ECB's holy grail is an inflation target around 2 per cent. A one trillion euro programme of bond-buying - detailed last Thursday - the chosen route to it. With a promise that along the way, growth will return as banks lend again. And investors seek higher-yielding, riskier investments. With QE as a protective blanket, says Draghi. (SOUNDBITE) (English) ECB PRESIDENT, MARIO DRAGHI, SAYING: "We also saw a further fall in the sovereign yields of Portugal and other formerly distressed countries in spite of the renewed Greek crisis. This suggests that the asset purchase programme may be shielding euro area countries from contagion." Draghi spoke as Greece embarked on technical talks with its international creditors. Those to agree reforms and unlock further funding amid growing frustration with Athens. A possible Greek exit from the euro zone: not good, says IG's Chris Beauchamp - but Draghi's is no idle boast. (SOUNDBITE) (English) IG, SENIOR MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: ''There's a sense that we can weather the storm, that we've got not only QE in place, but also those mechanisms introduced post 2011, 2012, that say that if one member leaves the euro zone, it won't necessarily cause a domino effect. I think QE has been the icing on the cake there.'' Draghi also made capital of a recent pick-up in euro zone economic data. A message consistent with last Thursday's upgraded forecasts from the ECB. And a euro at 12-year lows on the its new injection of liquidity. (SOUNDBITE) (English) IG, SENIOR MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: ''Every time the euro seems to take a dive during the intra-day session, the Dax goes up a few more points, and that still applies today. It makes German exports, especially, more competitive, but it does the same for the rest of the euro zone.'' The central bank plans to buy 60 billion euros a month of assets - mostly sovereign bonds - until at least September next year. With the promise that more could be bought, and for longer, if it has to.

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Draghi hails ECB's QE 'shield'

Wednesday, March 11, 2015 - 02:21