ECB to end stimulus programme by year’s end

European central bank to ease back on
quantitative easing measures but continue to keep rates

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Despite warning that the single currency area was going through
a soft patch at a time when protectionist risks were rising, ECB
President Mario Draghi said it will cut quantitative easing
from €30bn per month now to €15bn a month in September. It
will come to a full stop in December.

The move “is a major step towards dismantling the policies
brought in to stabilise the eurozone in the wake of the financial
crisis” says the BBC.

It brings to an end the ECB’s €2.4 trillion (£2.1 trillion)
asset-purchase programme introduced in March 2015 to avert the
threat of deflation in the eurozone.

The decision represents a belief in the central bank that the
eurozone economy, after years of weakness and recession, “is now
sufficiently robust that it can start to withdraw monetary
stimulus” says The Independent.

Signalling that the move would not mean rapid policy tightening
in the coming months, the bank also said that interest rates would
stay at record lows at least through the summer of 2019,
“suggesting protracted support for the economy, even if at a lower
level”, says Reuters.

The Guardian says the ECB’s statement
“reflected the battle between hawks and doves on the bank’s
council, with the decision on QE matched by a softening of its
approach to interest rates”.

It does, however, signal the beginning of the end for easy money
from the world’s top central banks, with the US Federal Reserve
dropping a major crisis-era stimulus pledge earlier this week.

BBC economics correspondent, Andrew Walker, described the move as “an important
moment”.

“It reflects the fact that the Eurozone recovery appears well
established – though it has cooled somewhat this year,” he
said.