The European Central Bank's quantitative easing isn't having the desired effect. Consumer prices dropped by an annual 0.1 percent in March, according to figures released Thursday, leaving the bank's 2 percent inflation target a distant dream. ECB President Mario Draghi's credibility is on the line.
So, starting now, the bank plans to increase its monthly bond buying to 80 billion euros ($91 billion) from 60 billion euros, and will add corporate debt to its purchasing list sometime later this quarter. But in the same way that the existing government bond program has destroyed price discovery in European sovereign debt, the inclusion of company debt risks trashing liquidity in that already sclerotic market.