ECB Meets Purchase Target in First Month of Quantitative Easing

The European Central Bank said it reached its purchase target of 60 billion euros ($65 billion) in the first month of its quantitative-easing program.

The Frankfurt-based institution settled 47.4 billion euros of public-sector purchases in March, and filled the rest of the monthly quota with covered bonds and asset-backed securities. The weighted average maturity of the government debt and supranational bonds bought under the plan was 8.56 years.

Faced with the risk of deflation in the euro area, ECB President Mario Draghi pushed through a QE plan that envisages asset purchases of 1.1 trillion euros through September 2016. Some policy makers including Bundesbank President Jens Weidmann have criticized the measure, arguing it’s unnecessary, while others such as Slovakia’s Jozef Makuch pointed to early positive effects.

“All feedback we have from markets tell us that there are no difficulties in carrying out these operations,” Draghi told Italian lawmakers in Rome on March 26. He expressed confidence the ECB would reach its target for the first month even though sovereign-bond purchases only started on March 9.

The ECB said 11.1 billion euros were spent on German debt in March. That was the biggest contribution to public-sector asset purchases in the region, while Malta’s 5 million euros was the smallest. The weighted average maturities ranged from 6.33 years in Slovenia to 11.7 years in Spain.

As of April 3, the ECB settled purchases of 52.5 billion euros of public-sector debt, 4.89 billion euros of ABS, and 64.7 billion euros of covered bonds, according to a statement on the institution’s website.

Since its announcement in January, QE has pushed down yields on government bonds, even as tense negotiations between Greece and its creditors threatened the stability of the single currency. While lending to companies and households has improved -- signaling monetary stimulus is starting to reach the real economy -- Draghi has warned that the recovery remains “cyclical” and needs to be underpinned by structural reforms.

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