NICOSIA: The European Central Bank (ECB) will launch into quantitative easing next week having increased its economic growth forecasts for this year and next.

President Mario Draghi said the first bond purchases with new money would take place on March 9.

The eurozone’s central bank has said it will buy 60 billion euros a month until Sept 2016 or until inflation is pushed backed towards a target of close to but below 2 per cent.

The ECB, which left interest rates on hold at record lows just above zero at its meeting off-base in Cyprus on Thursday, lifted its growth forecast to 1.5pc for this year, from the 1pc it predicted in December.

For 2016, growth of 1.9pc is now expected, up from a previous 1.5pc.

“The latest economic data, and particularly survey evidence available up to February, point to some further improvements in economic activity at the beginning of this year,” Draghi told a news conference.

“Looking ahead, we expect the economic recovery to broaden and strengthen gradually.”

An analysis of Reuters polls shows more than half the most important economic data reports from the eurozone since the start of the year have beaten the consensus forecast and many have topped the highest prediction. Germany, Europe’s largest economy, has led the way.

Inflation, now running at -0.3pc, is forecast at zero this year rising to 1.8pc in 2017. That is sufficiently close to the ECB’s target to suggest money printing will not run beyond Sept 2016.

The bank has a long way to go to convince markets its plans will be effective. Only half of the economists polled by Reuters think bond buying will help inflation rise towards the target of close to but below 2pc and half think the purchases will be extended. There are tentative signs inflation has bottomed out.

The February reading of -0.3pc was above forecasts, oil prices have rebounded from January lows, growth is picking up and the euro hit a fresh 11-year low against the dollar overnight, boosting prospects for higher imported inflation.

Published in Dawn, March 6th, 2015

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