European Central Bank’s purchase of corporate bonds as part of the large-scale quantitative easing program is showing short-term effect.  Prices declined slightly in May compared with the same month a year ago. The target level of inflation of the ECB is set at a level below 2%. Purchase is part of a large-scale program of the ECB's quantitative easing (of QE), whereby it acquires public sector bonds, mortgage bonds and asset-backed securities for €80 billion ($ 91 billion) monthly. Purchase of public debt is the main goal of the program. To meet quantitative easing the corporate bonds must have an investment grade and be issued by companies (not banks) of the Eurozone.   If the regulator buys less than the market is predicting the rally may turn in the opposite direction, experts say.  

 

Photo: www.telegraph.co.uk

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