FXStreet (Delhi) – Research Team at Westpac, notes that the ECB President Draghi disappointed markets in December when he announced the next step in the ECB’s alternative easing program. Key Quotes “The main alterations included: a 10bp cut in the deposit rate to – 0.30bps; an extension of the length of the asset purchase program to (at least) March 2017; and the inclusion of regional and local European government debt to the list of securities that can be purchased.” “To support short-term liquidity, main refinancing and three-month ‘longterm’ refinancing operations will be continued for “as long as necessary”. Confidence and term liquidity will also be aided by the decision to “reinvest the principal payments on the securities purchased under the APP as they mature” – again this will be “for as long as necessary”.” “Given the above policy alterations and the tone of the press conference, only incremental adjustments to policy can be expected hence.” “On the outlook, we remain less convinced in the health of the economy.” “Confidence has increased substantially; the cost of credit is falling; and credit conditions continue to improve. But it is still early days.” “In 2015, much of the momentum came from pent-up consumer demand, funded by dissaving.” “To endure, stronger consumption growth has to increasingly be funded by household income growth; however, this remains weak.” “It is also crucial that we see Euro Area firms act on their confidence and invest to expand capacity – resulting in activity, productivity and jobs.” “The ECB will need to do more to maintain confidence and credit growth and bolster real economic activity. The comparative strength of the Euro will also be critical in determining the region’s global competitiveness.” For more information, read our latest forex news.