The Draghi Affair

Mario The Magic Man Draghi, leader of the European Central Bank, has spoken.

The Wall Street Journal today reported, as many expected, the ECB will continue its handouts of money via its bond purchasing program though the amount purcashed each month will be less. So there are no real surprises here, including Draghi's comment obviously designed to sooth some nerves about the bank's presence in markets will be around for a while.

FRANKFURT—The European Central Bank decided Thursday to extend its asset-purchase program to the end of 2017, but will buy bonds at a reduced monthly rate.

It will maintain its monthly purchase volume at €80 billion ($86.2 billion) until March 2017 as planned, but will reduce it to €60 billion as of April. It kept all its interest rates unchanged.

Speaking in a news conference, ECB President Mario Draghi said the decision didn’t constitute a move to “taper,” or gradually phase out the bond-buying program.

“Tapering has not been discussed today,” he said. “The presence of the ECB on the markets will be there for a long time.”

Mr. Draghi said the governing council had also considered a six-month extension to the bond-buying program at the current monthly rate, but that there was a “very, very broad consensus” in favor of the alternative.

When it launched the program in March 2015, the ECB bought €60 billion a month, but that was increased in March 2016.

“We basically judged that the outlook of a sustained return to the inflation objective is not very different from the beginning of the program,” Mr. Draghi said. “More specifically, the risk of deflation has largely disappeared.”

wsj.com/articles/ecb-to-extends-stimulus-program-by-nine-months-at-reduced-rate