European Central Bank to Purchase 60 Billion Euros in Bonds Monthly

On Thursday, February 21, the European Central Bank announced the launch of a bond purchasing program for bonds issued in Eurozone countries, under which it will buy 60 billion euros worth of bonds from these countries each month. According to news agencies, this program, known as 'quantitative easing', has previously been implemented in several countries including Japan, the UK, and the US. The aim of this program is to combat further price declines and to stimulate economic growth and incentives through liquidity injection. This program is currently ongoing in Japan and the UK, but the US Federal Reserve ended its program last year after observing signs of economic improvement. Mario Draghi, the president of the European Central Bank, stated on Thursday that the bond purchasing program will begin in March of this year (mid-March) and is expected to continue until September 2016. A wide range of bonds from various banks and financial institutions will be purchased under this program. Inflation rates in recent months in the Eurozone have decreased, and there were concerns that without a response from the European Central Bank, a prolonged period of negative inflation could begin in this part of the world. Senior officials at the European Central Bank expect that through the bond purchasing program, they can raise inflation to their targeted level of two percent. In response to the announcement of the bond purchasing program, stock values in European and American financial markets rose. For instance, the stock index in the Paris stock exchange grew by one and a half percent, and the DAX index in Germany saw an increase of about one point two percent. Conversely, the value of the euro, the common currency of 19 European countries, decreased against its global competitors, with the euro-to-dollar exchange rate reaching 14.1, the lowest level in 11 years.