The European Central Bank (ECB) slowed the pace of its bond purchasing program but extended it for nine months. From April next year the monthly purchase volume is to be reduced to EUR 60bn from EUR 80bn at present, the ECB said following its December meeting. All told, this boosts the quantitative easing program by EUR 540bn to EUR 2.28 trillion. Should inflation remain below expectations in the coming months, the ECB has the option of ramping up purchases or extending the plan further still.
This pre-commitment to a substantial extension of the quantitative easing time horizon is unnecessary and, given the growing risks to financial stability in the Eurozone, also dangerous.