The ECB announced on Thursday that it would start its purchase
of sovereign bonds on March 9 to support an accelerating economic
recovery in the Eurozone, and would continue to do so until there
was a "sustained adjustment in the path of inflation". It
is expected that this scheme will push GDP expansion to 1.5% this
year, 1.9% in 2016, and 2.1% in 2017, compared with December
projections of 1% and 1.5% for 2015 and 2016 respectively, and will
also drive inflation back up to 1.8% by the end of 2017.
The announcement has already had an impact on the bond market,
as buyers drove the yield on Italy's 10-year benchmark down to
a new record low of 1.34%, and the German equivalent to 0.34%. Some
analysts have argued that the program could further distort the
bond market where the shorter-term debt of several countries
already has negative yields. However, ECB President Mario Draghi
said that the ECB would continue to buy bonds provided the yields
were above the central
