QE having a significant effect on economy: traders

[BENGALURU] The European Central Bank's trillion-euro quantitative easing programme is already having a significant impact on the eurozone economy, a Reuters poll of money market traders found.

At its monetary policy meeting in January, the ECB said it would buy 60 billion euros of mostly sovereign bonds every month from March until at least September next year to try and bring inflation back to its target.

Just a month since the money printing programme got under way, 14 of 21 euro money-market traders said it was having a meaningful effect, while seven said it was not.

"It's driving real interest rates lower and in time, it will work its way into the real economy. Inflation is ticking up a little bit. The euro under pressure against the dollar will certainly help in the near-term," said a euro money market trader.

Inflation in the eurozone has been negative for four months. The latest official data showed it was -0.1 per cent in March compared to February's -0.3 per cent while in January prices fell 0.6 per cent.

Since the announcement in January, the euro has weakened nearly 7 per cent against the dollar and is expected to ease to around US$1.04 in a year.

The survey also showed the ECB is expected to allot 105 billion euros at its weekly operation, less than the 108.3 billion euros from last week.

REUTERS