SMM3, March 8: just last night, the European Central Bank announced a new phase of interest rate resolution, keeping the three major interest rates unchanged, while announcing the opening of a new round of two-year targeted long-term refinancing operations in September. In addition, the bank has also revised its forward-looking guidelines on interest rates, which are expected to remain unchanged at least until the end of 2019, that is, there is no hope of raising interest rates within this year. Not only that, the ECB also cut inflation and GDP growth across the board in 2019-2021, although some officials believe the revised economic outlook is still too optimistic, according to people familiar with the matter.
With one stone stirring up thousands of waves, the market was in an uproar. On the same day, the euro plummeted to its lowest level since June 2017, sending US dollars to break through the 97 mark in one fell swoop, and the collective pressure on non-ferrous metals fell.
The deal to launch QE, by the end of 2018 was pushed until the end of the summer of 2019 and now directly to 2020. It looks like the ECB's drugs are getting more and more addictive and can't stop at all. Below is the Fed's balance sheet, which is currently around $4 trillion, which has shrunk by nearly $500 billion from its high. Although the prospect of raising interest rates is not promising, at least the Fed has started the road to raising interest rates since 2015. And began the repair of the balance sheet in 2017, with little success.
This is the balance sheet of the European Central Bank, which has reached nearly 4.7 trillion euros! And it's not over!
This is the QE situation of the European Central Bank in the past decade. The global financial crisis in 2008 detonated the ensuing European crisis. In order to deal with these two crises, the ECB has carried out two stages of quantitative easing, the second stage continues to this day, the impact is particularly important.
This is the size of the ECB's bond purchases, which began in March 2015, with monthly bond purchases ranging from 60 billion to 80 billion to less than 30 billion by 2018.
The current debt problem in Europe is indeed much more serious than the market thought. Now the problem can no longer be solved by buying bonds. If you take too much medicine, the effect will get worse and worse. When you still can't pull the economy after you issue a huge amount of money, it doesn't make sense to issue bonds again. The dovish Draghi has been buying bonds since he became president of the European Central Bank, and has been at the QE,. It seems that he will only QE, the ECB now needs a just-in-time president, like Weidmann, the president of the Bundesbank, who opposes endless stimulus. Close the currency gate in time.
Debt is to eat people, structural problems are not solved, the welfare system is not changed, monetary policy alone is useless, and on the day of liquidation, the eurozone may collapse and Europe will become the next Japan.
