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Banking, finance, and taxes

ECB Leaves Rates Alone, Touts Bond-Buying Plan

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By Paul Ausick Published
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The European Central Bank (ECB) this morning announced that it would leave its benchmark interest rate at 0.75%. ECB President Mario Draghi also said in his monthly press conference that the proposed bond-buying program — called Outright Monetary Transactions, or OMT — has helped ease difficulties in the eurozone financial markets.

Draghi also made it clear that the ECB is ready to pull the trigger on the OMT program as soon as a eurozone country seeks assistance. It is unknown whether or not Spain heard that call.

Eurozone inflation, which has been slightly above the ECB’s target of 2% or less, is expected to fall below 2% in 2013, according to Draghi. Economic recovery in the eurozone is expected to be gradual the ECB chief said.

Given that the Bank of England did not change its rates this morning, nor did it add to its asset purchase plan, the ECB’s lack of action is no big surprise. Until Spain applies for OMT funding, we really will not know if or how Draghi’s master plan will work. He seems to think everything’s groovy, but Germany’s Bundesbank is not totally onboard with the ECB’s bond-buying scheme. That is more than a little bit problematic.

Paul Ausick

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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