When will the ECB massive QE start to work?
The European Central Bank (ECB) started a massive Quantitative Easing (QE) programme a year and a half ago. It was worth more than a trillion Euros and in March this year it got even bigger. The ECB extended the QE programme by another six months and they even increased the monthly asset purchase, from 60 billion Euros to 90 billion Euros. On top of that, they have cut the interest rates to 0% and the refinancing rates are now in negative territory at -0.30%.
That must kick start the economy, isn´t it? Well, it´s not happening, at least so far. It´s just not working for whatever reason and it´s turning into a Japanese case, where the economy has been suffering for about two decades and all the measures taken by the Bank of Japan (BOJ) and the succeeding Japanese governments have accounted for nothing. The economic situation has barely changed in Europe.
The German ZEW economic sentiment/situation was just released and it missed the expectations by 2.0 points, slipping into negative territory. Besides that, the Eurozone construction output for May that was just released showed a deeper contraction, from -0.3% in April to -0.5% in May. You´d expect that with the Brexit vote the UK economy would fall apart, yet it´s not doing that bad for the time being while there´s no light at the end of the tunnel for the Eurozone economy.
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