WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: The ECB’s recently announced asset purchase programme will start in March 2015 and will remain in place, in any case, until the Central Bank witnesses a sustained adjustment in the path of inflation consistent with its aim of securing price stability. That said, the programme is effectively of an open-ended nature, a development that reflects the ECB’s determination to support euro area economic activity and address heightened risks of a too prolonged period of low inflation.
GREECE: Speaking in the press conference that followed the conclusion of y-day’s ECB policy meeting, President Mario Draghi clarified for those counties that are not investment-grade (i.e., Greece and Cyprus), that they need to be under a programme to be eligible for the asset purchases program. Explicitly for Greece, the ECB President clarified that, for the 33% issuer limit to be respected, the ECB cannot buy Greek sovereign bonds until some of the country’s debt the Central Bank already holds under the Securities Markets Programme (SMP) has been redeemed. According to the ECB President, this will not be the case before July of this year.
SOUTH EASTERN EUROPE
SERBIA: Speaking on the sidelines of the World Economic Forum in Davos, Prime Minister Aleksandar Vucic said that a final agreement on the country’s new €1bn 3-year precautionary Stand-By Arrangement will be reached on February 23rd.
CESEE MARKETS: Emerging stock markets extended their recent rally as the ECB’s monetary policy announcement yesterday continued to provide a boost to risky assets in morning European trade on Friday. With ECB’s latest monetary policy stimulus decision supporting expectations for further monetary easing by Central Banks in the region while also fanning optimism about an increase in capital inflows into domestic financial markets, CESEE currencies were mixed in Europe today. Along similar lines, local government bonds extended their recent rally.
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