Mario Draghi hinted at upcoming additional stimulus measures

Eurozone economic recovery remains heavily dependent on stimulus measures taken by the European Central Bank, said on Friday the ECB President Mario Draghi, hinting that the bank is likely to extend the program of "quantitative easing" for a total of 1.7 bln euro at its next meeting, which will take place on 8 December.
"We still can not cancel our vigilance", - said Draghi on a banking conference in Frankfurt, adding that the ECB will continue to act as justified by using all the tools that are available, while inflation did not grow sustainably.
He warned that central bankers do not yet see consistent strengthening of basic dynamics of prices and said that the ECB is committed to comply substantially the policy of monetary stimulus.
Central bankers from the ECB are preparing for quite a crucial meeting on December 8, which is expected to decide whether to extend the program of "quantitative easing." At this stage, the program should be completed at the end of March 2017.
By purchasing bonds, the ECB hopes to reduce real interest rates in the euro area, thereby encouraging lending, economic growth and inflation, analysts say. Despite these efforts, inflation in the region last month rose by 0.5% and remained still too far below the target of the ECB from just under 2%.

ECB stimulate financial markets, not banks

The four largest central banks held important meetings on interest rate policy within a week. The ECB and the Bank of Japan signaled that they have reached maximum levels of incentives now. Bank of England and the Federal Reserve kept interest rates unchanged as bankers in the United States risked not to disturb the delicate balance of the financial markets with withdrawal of stimulus.


What are the negative interest?

Negative Interest on commercial bank reserves at the central bank that exceed regulatory requirements amount of minimum reserves. In the US, where interest rates are not negative, commercial banks receive interest payments on reserves. In Eurozone banks must pay because behave more money than necessary. These reserves are increasing and from "quantitative easing" by buying bonds from the ECB. Banks face more interest expense along with the reduction in margins. This explains why bank stocks fell last year. The ECB create money that does not go directly lending and kill bank profits. This policy is likely to continue for a long time, judging by comments from ECB President Mario Draghi.