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Reuters poll - ECB QE will bring inflation to target: traders

Published 09/03/2015, 14:56
© Reuters. The new European Central Bank (ECB) headquarters is pictured in Frankfurt

(Reuters) - The European Central Bank's bond purchase programme will be successful in bringing euro zone inflation up to its 2 percent target ceiling, a Reuters poll found.

The programme, which began on Monday with the ECB buying government debt of euro zone countries, will add over a trillion euros to an economy that has struggled with rapidly falling inflation.

The plan is for a flood of money from the ECB's purchases to prompt banks to lend, leading to an economic pick up that returns inflation to target.

The latest data showed inflation was -0.3 percent annually across the bloc in February.

The ECB has said it intends to purchase 60 billion euros (43 billion pounds) a month until September 2016 but its ability to do so has been questioned due to the availability of debt it can buy.

Only just above half the traders polled, 11 of 21, said the ECB would be able to meet that target over the course of the programme.

"It (the 60 billion euros target) might be reached within the next weeks of the programme but after that, once all the bonds have been bought by the ECB, the continuous purchase is going to be difficult," said a trader at a larger dealer.

ECB President Mario Draghi said last week that the issue of availability of debt was 'not relevant' and noted that more than half of euro zone sovereign bonds were held outside the currency area.

Some signs of a pick-up in economic growth were already emerging before the QE launch. Recent data from the region has often beaten the consensus in Reuters polls and in many cases the top forecast.

© Reuters. The new European Central Bank (ECB) headquarters is pictured in Frankfurt

The ECB will lend banks 148.5 billion euros at its weekly operation the poll showed, slightly more than what it lent last week.

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