THE EUROZONE could be preparing to beef up stimulus measures in response to further turmoil in Greece.
The European Central Bank (ECB), which sets the Eurozone’s monetary policy, yesterday raised the number of organisations whose debt it could buy. When the quantitative easing (QE) programme was launched in March, the plan was to use newly printed money to buy bonds of 17 public sector agencies – state-owned companies focused on investment projects – on top of state debt. It has added another 13 agencies to the €60bn (£42bn) a month purchases.
“While formally of a technical nature, the timing of the release is conspicuous and suggests a pre-emptive move ahead of the 5 July Greek referendum. This reinforces the message...that the ECB is ready to respond to eventual heightened market tensions,” said economist Luigi Speranza from investment bank BNP Paribas.
The ECB’s policy makers believe QE is showing early signs of working, according to minutes of their last meeting on 3 June published yesterday. They also reiterated their commitment to see QE through to at least September 2016, despite rising volatility in financial markets.