Is the ECB embarking on big-time Quantitative Easing?

  • Europe in recession so European Central Bank (ECB) needs to do something to boost growth by injecting liquidity into system.
  • Available tools are: [1] Quantitative Easing (purchasing bonds of longer maturity than short-term govt. bonds) [2] Cocktail of other monetary policy tools like buying short-term bonds, asset-backed securities and covered bonds, and auctioning cheap cash to eurozone banks.
  • Thusfar German Bundesbank has been against [1] but [2] doesn't seem to be working so well. Consensus is that chances of [1] occurring are increasing, especially as EU growth slows and US growth picks up.

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