Thursday, January 29, 2015

ECB to pump 60 billion.

US Federal Reserve and the Bank of England announced plans for quantitative easing in 2009. This cleared the way for economic recovery in the US and UK.
QE programs of the U.S. Federal Reserve likely contributed to:
  • Lower interest rates for corporate bonds and mortgage rates
  • Higher stock market valuation, in terms of a higher price-earnings ratio for the S&P 500 index
  • Increased inflation rate and investor's expectations for future inflation;
  • Higher rate of job creation
  • Higher rate of GDP growth.

Similar effects can be expected in the ECB Stimulus. Investors cheered the ECB’s commitment to flood the eurozone with more than €1 trillion ($1.16 trillion) in newly created money, sparking a rally in stock and bond markets and sending the euro plunging.

Capital flight from European countries will be creating bubbles in emerging markets. Investing in Europe is not the best option when considering the better growth opportunities in the emerging markets. India can expect a portion of their ECB stimulus invested in our capital markets.





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