SEB believes that the European Central Bank's quantitative easing package will have little impact on Estonia, with the economic situation in neighboring countries and one-off factors playing a more important part.
ECB's stimulus package will have little impact on Estonia - SEB
23rd January 2015, 13:42
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«The European Central Bank's decision was on the whole more positive than expected, especially in view of several past disappointments. The financial markets' initial reaction to the decision also expressed optimism. The ECB succeeded in steering a middle course between German conservatism and expectations of the weaker eurozone countries. To calm down Germany, the bond-buying program contains several restrictions and different countries' risks were not treated all alike so as not to encourage irresponsible fiscal policy,» fund manager at SEB Varahaldus Endriko Vorklaev told BNS.
Vorklaev said the ECB hopes by buying bonds to channel money from safe government bonds to the corporate and personal loan market and boost loan offer.
«However, lending activity does not depend solely on offer but also on demand. Loan demand in turn depends more on corporate and consumer confidence, and for influencing it the ECB measures are limited. The previous steps to ease monetary policy did support stock and bond prices on financial markets, but the positive impact on the real economy has not been as big as was hoped. This time, too, there is no reason to expect miracles, but the move will have an indirect positive effect nonetheless,» the fund manager said.
Estonia has no government bonds and thus the impact of the measure will be indirect, he said.
«For our borrowers, the decision means a longer-lasting environment of low interest rates. Since the euro could weaken further under the impact of the decision, it will hopefully be of some benefit to exporters' competitiveness. Nonetheless, the impact on Estonia will be modest and we'll still depend more on the economic situation in neighboring countries and, due to the small size of our economy, on one-off factors,» Vorklaev said.
The ECB on Thursday launched a quantitative easing program under which 60 billion euros' worth of bonds will be purchased each month starting in March until September 2016. The overall volume of the program is at least 1.14 trillion euros.