-Michael Leister, a senior rates strategist at Commerzbank AG
The European Central Bank began buying government bonds under its quantitative easing programme designed to underpin inflation in the Euro zone. The plan calls for the 19 central banks in the currency bloc to purchase around €60 billion of public and private bonds each month until at least September 2016. Under QE, a central bank creates money electronically and uses it to buy government bonds that countries issue to pay their bills. This scheme pushes down interest rates on bonds and other financial assets, making it cheaper for companies to borrow and invest, thereby boosting spending and employment. On Monday, central banks were said to have bought German and Italian debt. In addition to that, Belgian and French securities were also acquired.
Meanwhile, in France the central bank revised downwards its growth outlook for the Euro zone's second biggest economy. The Bank of France now predicts the nation's economy to grow 0.3% in the first quarter, compared with the 0.4% annual growth expected in January. Nevertheless, the projected growth of 0.3% would be still higher than the 0.1% rise in the last quarter. In the whole of 2014, the French economy rose just 0.4%. Despite the growth outlook revision, indicators pointed growth accelerated in the three months through March as plunging oil prices and weakening Euro boosted consumer and business confidence.
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