ECB: Mario Draghi's delivers – ING

Carsten Brzeski, chief economist at ING, notes that the ECB just announced a big policy package to revive the Eurozone economy and to bring inflation back to target.

Key Quotes

“Here is what the ECB will do:

• Deposit rate cut by 10 basis point to -0.5%.
• A tiering system will be introduced.
• Forward guidance on rates is no longer calendar based but open-ended and state-dependent.
• QE will be restarted with 20bn euro per month, starting 1 November. There is no end date added to QE.
• The TLTROs will be repriced and include an incentive for banks to increase lending. Along the lines of the first two generations of TLTROs, banks which exceed the benchmark ECB loans will be charged at the deposit rate.”

“This is  Mario Draghi’s final “whatever it takes”. Depsite all market excitement now, the question remains whether this will be enough to get growth and inflation back on track as the real elephant in the room is fiscal policy. It is clear that without fiscal stimulus, Draghi’s final stunt will not necessarily lead to a happy end.”