George Efstathopoulos, Portfolio Manager at Fidelity International, comments on yesterday’s ECB announcement. Key Quotes “After disappointing in December this is a bold stance from Draghi and the ECB, which should be positive for both financial markets but more importantly the real economy. Since the BoJ introduced negative interest rates by adopting a three tiered system earlier in the year, European investors have been worried about a similar scheme that would further compress net interest margins for European banks and as a result impact their profitability but also their ability to increase lending and risk taking. Instead, via the new series of LTRO the banks will now essentially be subsidised to lend. This is a big positive for the banking sector, which has been oversold and under pressure in recent months. The increase of the asset purchase programme by €20b euros is also bolder than market had expected. Additionally, the eligible universe has now expanded to include investment grade bonds, a positive for risk assets, at a time when corporate bond spreads are trading at recent year highs. Periphery sovereign bonds also to benefit as ECB can now buy more of their outstanding debt.” For more information, read our latest forex news.