1.3 million euros a minute

March 9, 2016

A year ago today, the European Central Bank began its programme of quantitative easing — money printing to buy assets — with a view to lifting sub-zero inflation back up towards the target of just under 2 percent. One year on, it has spent over 700 billion euros buying assets — mainly sovereign bonds, but also debt issued by some European institutions, as well as asset-backed securities (ABS) and covered bonds — at a pace of 1.3 million euros a minute.

EZ inflation via QEAs shown in this graphic, it has failed to bring euro zone inflation (now at -0.2 percent) anywhere near the target rate as a host of external factors from the slump in the price of oil to the Chinese slowdown exert bigger influence. Similar experiments around the world have also fallen short of the mark, prompting much hand-wringing about whether central bankers are still the safekeepers of the global economy that some had once thought they were. It’s against this backdrop that ECB President Mario Draghi will step up for the Bank’s latest rate-setting meeting tomorrow. Expectations are firmly for more stimulus; less sure is whether it will make much of a difference.

Street protests aren’t quite what they used to be in France, but President Francois Hollande nonetheless faces a backlash over labour reforms that are his most ambitious attempt yet to revamp the country’s strictly codified work regime. The bill is intended to make it easier for employers to shed workers and negotiate everything from maximum working hours to holidays and pay on rest breaks. It has already sown dissent in his ruling Socialist party and sparked talk that Hollande will throw in the towel for re-election next year. Today is a key day with youth groups and unions planning a demo and a rail strike.

Today marks the official start of what could be a very brief Portuguese co-habitation, with the centre-rightist Marcelo Rebelo de Sousa being inaugurated as president alongside a shaky Socialist-led coalition propped up by far-left allies. The new government has set about reversing the austerity-based reforms of the previous conservative incumbent, but is also seeing investment start to fall and past declines in joblessness peter out. The point is that Rebelo de Sousa will from April have powers to sack the government and call new elections: his inaugural speech today will be watched closely for clues as to how keen he is to do that.

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