At the end of the European Central Bank’s (ECB) monetary policy meeting on Thursday, president Mario Draghi announced more policy measures to avert the threat of deflation in the eurozone and to revive the European economy. The widely expected quantitative easing (QE) measures were described by Mr Draghi was “an expanded asset purchase programme”.

Under the plan, the combined monthly purchases of public and private sector securities will amount to €60 billion and will last until the end of September 2016. The size of monthly asset purchases exceeded the €50 billion expected by many economists.

Earlier in the week, the International Monetary Fund (IMF) estimated that the world economy will grow by 3.5 per cent in 2015, according to its quarterly global growth outlook. This is the steepest cut in outlook for three years and down from the 3.8 per cent growth rate forecasted by the fund in October.

The IMF also cut its estimate for growth next year to 3.7 per cent from four per cent in October and reduced its 2015 estimates for places including the eurozone, Japan, China and Latin America. The deepest reductions were in countries suffering from crises, such as Russia, and for oil exporters, including Saudi Arabia. The IMF called for governments and central banks to pursue accommodative monetary policies and structural reforms to support growth.

Finally, in their most recent monetary policy meeting, Bank of England (BOE) policymakers voted unanimously to keep rates unchanged at 0.5 per cent, after two members, who had been voting for rate increases since August, moved to the ‘no change’ camp.

Even with moderate growth and declining unemployment, falling global inflation means the BOE is back in neutral policy gear. The markets had not expected the shift in stance and are now pricing in a first rate increase from the BOE as late as the second quarter of 2016.

UK inflation in December fell to 0.5 per cent, far below the BOE’s two per cent target, but this is almost entirely due to plummeting oil prices. On the other hand, lower oil prices will likely give consumers a boost.

This article was compiled by Bank of Valletta plc for general information purposes only.