Mario Draghi has been waving a loaded gun so often in the recent months, pledging to act, that some analysts even believe he is afraid of doing anything. While investors are still trying to guess what kind of tools the ECB will use, bond yields in many countries from Spain to Greece have fallen sharply since Mario Draghi's announcement.
Some believe the central bank will revise its deposit rate, which currently stands at zero. A 10 basis-point adjustment will mean the central bank will effectively charge domestic banks for parking money at the ECB rather than lending it. However, such a measure can counter-intuitively strengthen the single currency rather than weaken it, forcing investors to move towards peripheral-country investments in search for higher rates.
Another problem for the ECB is growing support for German anti-euro party, which can win around 7% of the German votes for the European Parliament during elections on May 25. Additionally, lawmakers from Angela Merkel's party have been criticizing the ECB policies, with Wolfgang Schaeuble expressing his concerns about the threat of unlimited bond-buying programme. German Finance Minister has already warned he is not going to back Mario Draghi's decision to activate the Outright Monetary Transactions bond-purchasing plan, as German constitutional court is putting its legality under scrutiny.
© Dukascopy Bank SA