Draghi's QE moves to starting line as economic outlook brightens

By Stefan Riecher

The euro-area economy has taken a step in the right direction.

While improving conditions over the past month won't change Mario Draghi's plan to start buying government bonds within days, continued economic recuperation may well stir a debate about when to end them. So far, officials have indicated the buying spree could be extended beyond its proposed timetable -- a less likely outcome if an easing in the region's price slump and a drop in unemployment mark the beginning of a trend.

Draghi will have an opportunity in two days to add to details of the 1.1 trillion-euro ($1.2 trillion) quantitative- easing plan, which was announced in January amid dissent from some policy makers. After a Governing Council meeting in Nicosia, he'll also unveil the ECB's first growth and inflation forecasts for 2017, numbers that will have significance for the duration of QE.

"The picture for the eurozone appears to be slightly rosier," said Carsten Brzeski, chief economist at ING DiBa in Frankfurt. "At some point, long-term inflation forecasts and the bank's commitment to purchase 60 billion euros of assets per month until September 2016 could limit the ECB's flexibility and put it in an uncomfortable situation."

Consumer prices in the 19-nation euro area fell 0.3 percent in February, half as much as the previous month and less than economists forecast. Unemployment dropped to 11.2 percent in January, the lowest since April 2012. While the data may indicate the worst is passing, the inflation rate still isn't anywhere near the ECB's goal, underlining the case for monetary stimulus.

Open ended

Purchases under the expanded asset-purchase program are set to start as early as this week....