As expected ECB announce massive QE program
Adam Pike, News Editor
23 Jan 2015, 10:29 a.m.
As expected the European Central Bank (ECB) announced they would pump 1.1 trillion euros into the financial markets in an attempt to stimulate the failing Eurozone economy.
President of the ECB, Mario Draghi, confirmed the bank will inject 60bn euros a month into the financial system until at least September next year.
The newly printed money will be used to buy government debt in the hope it will boost confidence, raise inflation and lower the value of the euro against its major trading partners. Following the announcement the gold rose above $1,300 as trading volumes in New York surged.
The announcement is likely to infuriate the Germans, who believe the policy could eventually lead to significant inflation, destruction of the euro and offer debt laden economies such as Greece an economic bailout.
In a move to calm the Germans, Draghi promised each individual Central Bank will bear the risk if their governments default on their share of the debt.The Central Banks of Switzerland, India, Canada, Turkey and Denmark have all lowered their head line interest in the past weeks in an attempt to stop their economies falling into a deflationary spiral. In the UK analysts are now forecasting interest rates are unlikely to rise until 2016 causing pain further pain for depositors.
Gold and silver historically perform well when central banks print money. Since the start of the year the gold price has jumped form £759 per ounce to £864 per ounce.