More digging up on the ECB website and the full explanation of TLTRO’s and QE.
QE first and the message is that they are;
To intensify preparatory work related to outright purchases of asset-backed securities (ABS).
As I said in my after thoughts, it’s on the table but a fair way away from being launched (if it does at all). The big issue is going to be who and what they buy. That’s where it will get sticky with every member state having an idea of what crud they want to sell the ECB
Targeted LTRO’s
Two lots are being fired up for September and November this year, with maturities of September 2018. After that they will be available quarterly from March 2015 to June 2016 with repayments not due until 24 months after each issue, and will be able to be made every 6 months. Interest will be paid in arrears after the borrowed money has been repaid. The interest rate will be decided at the time of each issue and will 10bps over the main refi rate at the time.
This basically gives banks time to plan how they want to offer the money to the economy. It puts the ball firmly in their court. Let’s hope they do something this time.
Again, it all amounts to a can kick through to September and the rate cuts come into effect from 11th June. From now we need to see what the money does. Will it move out or stay with the ECB? Paying the ECB 0.1% for them to hold the money may not be enough to see any meaningful movement.
Full details here
Details of the SMP sterilisation cessation here
