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ECB Press Conference: QE announced

-          ECB will buy 60 bln euro per month of assets until end of Sep. 2016

-          ECB will keep buying bonds until inflation substantially improves – flexible condition

-          The total size of the program is 1,14 trln euro – more than the market has expected

-          Asset purchases will be decentralized: national central banks will have to bear most of the risk

-          The risk will be shared by all of the euro area’s central banks on purchases of securities of European institutions (which will be 12% of the additional asset purchases). The rest of the NCBs’ additional asset purchases will not be subject to loss sharing. The ECB will hold 8% of the additional asset purchases. This implies that 20% of the additional asset purchases will be subject to a regime of risk sharing

-          TLTRO rate will become lower (dovish factor)

-          In the coming months inflation will be negative, but will start rising later in 2015 and in 2016

-          The risks surrounding the economic outlook for the euro area remain on the downside, but should have diminished after today’s monetary policy decisions and the continued fall in oil prices over recent weeks

Conclusion: on balance the ECB was more dovish than expected.

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