LES ECHOS (France), DIE WELT, DER SPIEGEL (Germany), IL SOLE 24 ORE (Italy) BLOOMBERG (US), BBC NEWS (UK)
FRANKFURT – Aiming to squelch speculation of an impending demise of the euro, European Central Bank President Mario Draghi said policymakers have agreed to an unlimited bond-purchase program to regain control of interest rates in the single currency zone, reports Bloomberg.
The program “will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro,” Draghi said during Thursday afternoon's widely anticipated press conference in Frankfurt.
The ECB will target government bonds with maturities of one to three years, including longer-dated debt that has a residual maturity of that length, said Draghi, calling the euro "irreversible."
Ahead of the announcement, the European Central Bank kept the benchmark euro zone interest rate unchanged at a record low 0.75%, as expected by most observers.
Italian Prime Minister Mario Monti said Thursday that the stakes are higher than ever, and called on politicians on the national level across the continent to stop blaming the crisis on demands that Europe is making, Milan-based business daily Il Sole 24 Ore.
“Rather than the ultimate fulfillment of (Europe’s) union of peoples, the euro paradoxically could become a major factor of its disintegration,” Monti said in a speech in Florence. “This would be even more harmful than the material consequences of the crisis. If we don’t increase the political and psychological vigilance, this will happen.”
However, Germany remains critical of the ECB. According a poll carried out by Der Spiegel, 42% of German citizens have little or no confidence in Draghi, while only 18% of Germans say they trust the current ECB President.
The German stock index (DAX) barely reacted to the news, reports Die Welt.
In the afternoon, the German index was still 1.30 percent higher at 7,055 points, but held up to the acclaimed 7000-point mark.
The ECB announced earlier today that it forecasts a deeper economic contraction for 2012. Euro-zone GDP will drop 0.4 percent this year instead of 0.1 percent, it said.
