European Central Bank (ECB) President Mario Draghi’s long-awaited stimulus package to boost the eurozone economy failed to impress the investors who sought firm targets by the central bank to revive the euro-area’s faltering economy.
Announcing the stimulus package, the ECB boss said that the bank will start purchasing of assets for at least a two- year period keeping an eye at boosting inflation and economic growth across Europe.
Draghi said that the officials will commence sucking up covered bonds in October and asset-based securities this quarter, which will be continued for at least two years.
The investors expressed disappointment at Draghi’s motives saying he completely shied away from revealing a definitive goal set by the central bank in terms of buying of the assets.
“It’s a missed opportunity. We were hoping for some kind of metric on the balance sheet,” said James Ashley, chief European economist at London’s RBC Capital Markets.
The ECB head, however, said that the total stimulus may be less than the one trillion euros (USD 1.3 trillion) that he had suggested earlier.
Declining to entertain the investors’ emphasis on the precise size of the balance sheet, Draghi reiterated saying “he wanted to steer the central bank’s (ECB) assets toward the early-2012 levels.
Azad Zangana, European economist at London’s Schroder Investment Management Ltd., said that the ECB had not locked in a number during its crucial announcement as it may have suffered division of opinion among its policy makers or it may have lacked available assets limits any ballooning of stimulus.
“Investors had hoped that the ECB would step-up stimulus plans after the recent weakness in both growth and inflation data, either by announcing a very large amount of purchases or the addition of sovereign-debt purchases,” Zangana said while adding, “The problem the ECB faces is that the pool of assets being targeted is too small to make a major impact on the economy.”
In the beginning of 2012, the ECB’s total assets were at more than three trillion euros as compared to two trillion euros currently.