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ECB Announces Quantitative Easing

Thursday, January 22, 2015

The European Central Bank (ECB) has launched its widely expected bid to rejuvenate the Eurozone economy.

The ECB president, Mario Draghi, announced the bank would buy more than €1 trillion in assets in a move far larger than anticipated. The ECB will buy €60 billion bonds each month until the end of September 2016 in a process known as quantitative easing (QE). In theory, QE increases the supply of money, keeps interest rates low and encourages borrowing.

Markets reacted positively with bond prices rallying across the board. However, the news met with a muted response in Germany where politicians and business leaders fear it will reduce the pressure on European countries to reform their economies.