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![Don't call it tapering, insists Draghi adding that the stimulus program could be increased [Xinhua]](http://thebricspost.com/wp-content/uploads/2016/12/260698585_8-e1481383933363.jpg)
Don’t call it tapering, insists Draghi adding that the stimulus program could be increased [Xinhua]
The ECB extend the bond-purchasing stimulus program – originally slated to terminate in March 2017 – till December 2017. It had previously hinted at an extension.
But in what was largely an unexpected move, the bank decided to “trim” the cost of its bond buying by 20 billion euros starting April 2017, bringing it down to 60 billion euros a month.
The move is similar to the US Federal Reserve’s tapering of its $85 billion quantitative easing program by $10 billion a month starting January 2014. It eventually did away with the entire stimulus program as the unemployment rate fell from 7 to 4.9 per cent last year.
However, Draghi maintains that this cut does not constitute a taper.
“There is no question about tapering. We can even go back to 80 (billion)… there’s a range of options,” ” Draghi said.
Euro bond yields rose while the currency dipped in what was its most substantial one-day percentage drop against the dollar since June after the announcement.
The ECB’s decision to extend quantitative easing implies that the bank is yielding to conservative members like Germany and the Netherlands.
In September, the ECB agreed to keep its stimulus program as is with no change, through which it was buying back 80 billion euros worth of bonds every month to be terminated by March 2017 – a total stimulus of over 1.4 trillion euros.
The ECB decision weakened the euro currency at press time driving it down to 1.0561 to the US dollar.
The BRICS Post with inputs from Agencies
