ECB begins bond buying to ease economic woes

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ECB begins bond buying to ease economic woes

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The European Central Bank has begun bond buying with the aim of igniting inflation and growth.

The scheme, which is part of its quantative easing programme, will last until at least September next year.

But many critics say they are far from optimistic, especially given pressure on the euro from divergent monetary policies of the Fed and the ECB.

Robert Halver, head of market research at Baader Bank does not think it will be a success: “There will be more liquidity on the markets but the banks will not use this liquidity to grant loans to the economy because the interest rate expectations are not all that high, especially not in the periphery of the eurozone.

“That means more money for the equity markets, the real estate market and most of all more debts because it would be a waste not to take up loans on these conditions,” he added.

German 10-year yields, the euro zone benchmark, fell six basis points to 0.34 percent, a slide that stretched to Dutch, French and Belgian yields among others.