Markets rally as ECB hikes growth forecasts and begins QE – as it happened

Mario Draghi announces that QE programme starts on Monday, as the ECB raises its growth forecasts for the eurozone

• Summary: QE, Greece, and more growth
• How the PSPP programme will work
• Press conference highlights start here

4.46pm GMT

European stock markets have closed at their highest level since November 2007, the early days of the financial crisis.

"He showed his determination to stick with the programme and dismissed ... the problem (that sellers will be hard to find)....

"Overall that's positive for equities."

4.38pm GMT

The ECB has focused attention back on Cyprus by holding this month's meeting in Nicosia.

"Elite corruption, though endemic, is far less destructive than it is, say in Greece, and the mentality has many western European traits partly as a result of the British legacy albeit mixed with Mediterranean and oriental values."

4.27pm GMT

Why is Mario Draghi like Diego Maradona?

Read Heather Stewart's analysis to find out:

4.16pm GMT

Christopher Vecchio, currency analyst at DailyFX, says Mario Draghi is responsible for the euro plumbing new 12-year lows this afternoon:

When President Draghi revealed that there would be a cap on the QE program - the ECB would not buy bonds whose yields were below the interest rate corridor floor of -0.20% - the Euro hit the skids.

Perhaps this is an indication that market participants feel there simply won't be ample supply of short-dated debt for the ECB to purchase in order to make its QE program viable; thereby boosting the possibility that the ECB will have to enact more easing down the road, as its current program eventually falls short of its goals.

4.11pm GMT

Marc Ostwald of ADM Investor Services reckons Mario Draghi was particularly assertive today:

This was Draghi at his chest thumping best, boasting of the ECB's success in bringing down long-term interest rates, and corporate lending rates (emphasizing convergence across the Eurozone, though omitting the fact that this does not apply to Greece and Cyprus), even before the actual QE programme has started.

The UK's Sun newspaper might headline a story on this press conference with the headline "It was the ECB wot done it"

4.08pm GMT

Analysts at Teneo Intelligence have produced a handy wordmap.

It shows the differences between Mario Draghi's statement today and the one at the previous meeting in January:

Regarding the program's duration, Draghi made no effort to clarify the tension between the two possible endpoints he had suggested in January: either September 2016 as a fixed date or once a sustained adjustment in the path of inflation is underway.

The still frequent use of "credit", "recovery" and "unemployment" in his opening remarks today might suggest Draghi's sense of urgency has not ebbed away since January. If sustained, this could eventually translate into a more flexible handling of the duration of the purchasing program.

3.52pm GMT

After hitting a 12-year low during Draghi's press conference, the euro is hovering around $1.104 to the US dollar.

Alex Edwards, head of the corporate desk at UKForex, predicts it will keep falling:

"Putting it mildly, there isn't a lot of confidence in the euro system at the moment. Breaking through 1.10 will likely mean a new range is soon carved out in EUR/USD. Given the market's current reaction to Draghi's comments, it might not be long before we see parity with dollar."

3.44pm GMT

European stock market have rallied, on the prospect of eurozone QE beginning on Monday.

The French CAC and German DAX indices are both up around 1.1% in late trading.

3.41pm GMT

Got more questions about the PSPP programme? Here's the place to go:

ECB's QE Q&A includes 6 occurrences of the word "flexbility". http://t.co/HMzcbveJZi

3.37pm GMT

We've enjoyed some vintage European Central Bank press conferences over the years, especially since Mario Draghi took charge. Today's session in Cyprus wasn't one of them, alas. Maybe the ECB circus just doesn't travel well.

3.03pm GMT

This is a good summary:

.@lorcanrk has your ultra-simple explanation of how ECB QE is going to work. http://t.co/Amd27vH9FG

2.57pm GMT

The European Central Bank has just released details of its new quantitative easing programme.

Here are the key points:

Note "substitute purchases". So annoying when online shopping - you click on Bunds, then they deliver European Atomic Energy Community bonds

2.32pm GMT

It's been a funny old press conference:

Funny moment at ECB presser as Cypriot CB Governor says "I'll answer in Greek" and then carries on speaking English.

2.25pm GMT

Georghadji: Remaining capital controls to be lifted soon

2.25pm GMT

It's nearly two years since the Cyprus bailout; with hindsight, would the ECB do anything differently?

Draghi bats it over to Cyprus central bank president Chrystalla Georghadji.

2.22pm GMT

How does the ECB see core inflation changing in the months ahead?

Draghi explains that the forecasts for headline inflation (see earlier in the blog) are not only based on oil prices; they also reflect household disposable income and the progress in closing the 'output gap'

* Draghi - closing of output gap seen happening gradually through 2017 - RTRS

2.19pm GMT

Draghi is reiterating that the ECB has lent a100bn to Greece:

The last thing you can say is that the ECB is not supporting Greece.

2.19pm GMT

Oops... Cyprus's central bank governor, Chrystalla Georghadji, just mentioned the dreaded T-word.

Highlights: Cyprus CB governor accidentally saying 'Troika' and the shouty crackers guy asking a question. Not the best ECB presser ever.

2.15pm GMT

The euro has hit new 11-year lows since the press conference began

#Euro drops to $1.1007, fresh 11year low on Draghi comments. pic.twitter.com/smuE6HsMm5

2.14pm GMT

Don't blame us....

Draghi: The Greek waiver existed as long as programme was by and large on track

2.13pm GMT

Draghi appears to be criticising the new Greek government:

Draghi is basically implying the Greek govt is undermining the solvency of the Greek banks w bad communication. Hey Athens, he hve a problem

2.12pm GMT

This is an important point -- the ECB could start accepting Greek bonds as collateral again, if Greece meets upcoming debt repayments.

#Draghi: ECB ready to resume Greek waiver if conditions met; ECB could buy Greek debt from July/Aug as soon as Greece repays SMP bonds due

2.11pm GMT

Draghi then warns that inappropriate 'communication' has hurt the Greek banking sector for driving up bond yields and lowering the solvency of Greek banks.

Draghi: Essential that this solvency is maintained. Some communication undermines this, destroys collateral

2.08pm GMT

The next question is about the a68bn of emergency funding being provided to Greek banks.

Draghi replies that the Greek banking system is solvent, and "a lot has been done" to strengthen it.

2.05pm GMT

High drama in the press conference, as the last questioner (speaking Greek, I think) tries to respond to Draghi's last answer.

Oh dear ... it's all kicking off now ...

2.05pm GMT

The ECB has not changed its mind on Greek debt; it is still refusing to accept it as collateral when making loans to commercial banks.

So #Draghi confirms they haven't reinstated waiver for #Greece sovereign debt to be accepted as collateral for refinancing operations.

2.01pm GMT

The next question is about Greece, and why it isn't included in the new asset purchase programme (due to translation problems I'm afraid I didn't catch it exactly).

Draghi is explaining that the ECB cannot buy the bonds of any country if they're in a reform programme, so Greek and Cypriot debt are both excluded.

1.56pm GMT

Draghi: Will not buy bonds yielding below deposit rate

1.56pm GMT

Another question on QE -- could government bond yields fall so far into negative territory that the ECB can't actually buy them?

Draghi replies that people used to warn that eurozone debt levels were very high, now people are worrying that there aren't enough bonds for us to buy.

Fantastic answers by Draghi pointing to inconsistency of critics towards QE, either too small or too big.

Draghi: How negative will we go [on bond purchases]? Until the deposit rate.

1.50pm GMT

European Central Bank raises eurozone growth forecast for 2015 to 1.5% from 1%, while cutting 2015 inflation forecast

1.50pm GMT

Is the ECB willing to allow Greece to issue more short-term debt, by raising the current ceiling on T-bill issuances?

We are a rule-based institution, Draghi replies, not a political one.

*DRAGHI SAYS ECB CAN'T PRINT MONEY TO BUY GOVERNMENT BONDS

The @ECB "not a political institution", says Draghi. Best laugh so far.

1.47pm GMT

Onto questions...

What does the ECB mean when it says QE will run until it sees a "sustained" improvement in the inflation path?

1.45pm GMT

There is no room for complacency, Draghi adds. Governments must deliver structural reforms quickly and decisively, to underpin confidence and encourage companies to invest.

Eurozone governments must keep to their fiscal targets, and fiscal inbalances must be tackled, he concludes.

1.43pm GMT

The ECB has cut its inflation forecast for this year, and predicts prices will be flat.

It now expects inflation to be 0.0% in 2015, down from 0.7% previously.

WOW ECB staff 2017 HICP forecast at 1.8% ! That must include nearly all QE effects then.

1.42pm GMT

Draghi is giving a confident vibe:

All growth forecasts higher... he sounds like a man who thinks he's done enough

1.40pm GMT

The ECB has raised its growth forecasts.

It now expects GDP to rise by 1.5% this year, up from 1.0% previously, followed by faster growth in 2016 and 2017:

Upbeat staff forecasts for GDP: 1.5% in 2015 (up from 1.0%), 1.9% in 2016 (up from 1.5%), 2.1% in 2017 (first estimate).

1.38pm GMT

On economic growth... Draghi warns that the recovery will be 'dampened' by the slow pace of reforms, and the ongoing balance sheet adjustments.

1.37pm GMT

The recent fall in the oil price should help the eurozone economy, Draghi says, by boosting household spending and cutting firms' costs.

1.37pm GMT

Draghi argues that the announcement of QE has already helped the eurozone economy.

The programme should improve economic growth outlook and reduce economic slack, he adds.

1.34pm GMT

Technical details of the QE programme will be released later today.

Draghi: Additional information on implementation of programme to be released at 15:30 CET on ECB homepage

1.34pm GMT

Draghi confirms that the ECB left interest rates unchanged at today's meeting

And he then announces that the ECB will begin buying eurozone government bonds on 9th March, under its new QE programme.

1.30pm GMT

Mario Draghi has arrived, and is welcoming reporters to today's press conference in Cyprus

1.21pm GMT

The ECB's press conference starts in 10 minutes. It is being streamed live, here.

1.15pm GMT

The ECB chose a nice day to visit Cyprus; it looks rather sunnier than Frankfurt:

Press conference venue looking sunnier than usual. pic.twitter.com/huVw8Ig0xt

1.13pm GMT

There are a few key themes to watch out for in today's press conference with Mario Draghi.

12.54pm GMT

#ECB left rates unchanged as it prepares to start QE program. Main rate remains at 0.05%, depo rate at -0.2%. pic.twitter.com/KP7lZK92MH

12.53pm GMT

Here's a snap from today's ECB meeting in Cyprus:

Governing Council gathers in Nicosia pic.twitter.com/6dJqhQeokV

12.49pm GMT

So, the ECB's main refinancing rate remains at 0.05%, the lowest level level.

The deposit facility rate remains at -0.2%, so commercial banks will be charged for leaving deposits at the ECB.

12.46pm GMT

Here comes the European Central Bank decision.... and it's also left its benchmark interest rates unchanged.

European Central Bank leaves rates unchanged #ecb #euro

12.44pm GMT

One central bank decision down, one to go....

Next up is the #ECB at 12:45pm with its interest-rate announcement.No change is likely as we will hear about #QE at 1:30 but you never know!

12.44pm GMT

Britain's small firms are delighted that interest rates remain so low.

John Allan, Chairman of the Federation of Small Businesses (FSB), says

"The Monetary Policy Committee has made the right decision in maintaining the current interest rate, with inflation at a record low of 0.3% and the risk of long term deflation still present in Europe.

"Many of our members plan to grow their businesses in 2015, and low interest rates are giving them confidence to invest in their firms by hiring new staff and increasing wages."

12.33pm GMT

Jeremy Cook of World First also reckons that UK interest rates could be unchanged until 2016*:

"We are coming to the end of this ultra-low interest rate experiment in the UK, although I believe there is the possibility that a year from today, rates will remain at 0.5%.

Unemployment is falling healthily, the declines in inflation are temporary and soon to come to an end and growth is becoming increasingly resilient.

@graemewearden I know things are a bit sluggish but this (from the liveblog) seems excessive. pic.twitter.com/Vd5cfJ1UGX

12.15pm GMT

Martin Beck, senior economic advisor to the EY ITEM Club, reckons UK interest rates might not rise until early 2106 2016, because inflation is so far below target.

He adds:

While the risks of an earlier rate rise have probably increased lately, we still think it most likely that the Bank will wait until February 2016, by which time inflation will be back above 1% and heading towards the 2% target.

The MPC may have chalked up six years without raising Bank Rate, but we think it will narrowly avoid making it seven."

12.03pm GMT

Economists have consistently failed to predict that UK interest rates would stay this low for so long, analysts at RBS point out.

Market expectations for Bank Rate have changed a lot since 2009 & they have consistently been well wide of the mark. pic.twitter.com/Scylaoq9Qh

12.02pm GMT

BOE holds rates for 72nd month in a row. In other news sky still blue, beer still delicious, death still inevitable

12.00pm GMT

Britain has just entered its seventh year of record low borrowing costs.

@BankofEngland maintains #BankRate at 0.5% and the size of the Asset Purchase Programme at 375 billion

11.51am GMT

Just 10 minutes to go until the Bank of England announces its decision on interest rates.

Oh the suspense, until analysts at ING ruined it....

ING slightly jumping the gun with its analysis about why the @bankofengland hasn't changed rates/QE today pic.twitter.com/8pv6RQV2Gw

11.49am GMT

2014 was a good year for Willie Walsh, the boss of British Airways' parent company IAG.

Walsh picked up 6.4m last year, an increase of almost 30% on 2013. That's *despite* turning down a 2% increase in his basic salary. Leading by example, apparently....

"Once again the CEO led by example in proposing restraint in exec pay" British Airways/IAG remuneration cttee as Willie Walsh gets 6.4m

11.02am GMT

Europe's stock markets are inching higher ahead of the European Central Bank's decision on monetary policy, and subsequent press conference.

Central banks have been the driving force behind the booming stock markets over the past few years and now it is the ECB's turn to flood the financial system with money.

Eurozone equity markets are highly dependent on the stimulus package from the ECB and traders will be looking for Mario Draghi to give the green light signalling the next round of buying.

10.23am GMT

Hopes that Greece's labour market was recovering have been dented by new data, showing that the seasonally-adjusted unemployment rate rose in December to 26.0%, from 25.9%.

Greece's Unemployment Rate Increases to 26 Percent in December pic.twitter.com/qJVk1HJtPR

Still rising RT @MarkitEconomics Unemployment rate in Greece at +26.0% in December from +25.9% in November

10.10am GMT

Over in Athens the Greek finance ministry has issued a tersely-worded statement denying that the government's reforms - being fine-tuned ahead of Monday's meeting of euro area finance ministers - was "discussed" at a preliminary Euro Working Group session on Wednesday.

"The finance ministry categorically denies reports that the contents of the Greek proposals were discussed during yesterday's Euro working group," it said.

The statement also rejected reports that teams representing the "institutions" - the EU, ECB and IMF keeping the debt-stricken economy afloat and until recently known as the Troika - had also arrived in Athens. "They are beyond reality," it said.

9.52am GMT

Drip, drip, drip... RT "@Efiefthimiou ECB raised ELA for #Greece banks by 500mln euros to 68.8 bln euros vs 68.3bln via @capitalgr"

9.50am GMT

Greek financial website CapitalGR is reporting that Greece's banks have been given another a500m of emergency liquidity by the ECB.

ECB raised ELA for #Greece banks by 500mln euros to 68.8 bln euros vs 68.3bln via @capitalgr

9.22am GMT

Britain's auto industry has posted its longest ever streak of sales growth.

New UK car registrations were 12% higher year-on-year in February, suggesting consumer spending remains robust.

New car registrations last month up 12% on year earlier - 36th month of growth, which SMMT says is longest on record.

8.59am GMT

8.57am GMT

Foreign exchange traders have pushed the euro down to its lowest levels since September 2003, ahead of the ECB's press conference later today.

The euro hit $1.1028 in early trading, on anticipation that Mario Draghi will announce details of the eurozone's new quantitative easing programme.

8.37am GMT

Cyprus's president Nikos Anastasiades will be very happy that ECB president Mario Draghi showered praise on his government last night (flags up our correspondent Helena Smith)

"It is safe to say that he programme has been yielding very concrete results, in fact even better results that were forecasted two years ago."

The restructuring and recapitalisation of the banking sector has led to a significant improvement in the health of the financial system.... Indeed it is remarkable that Cyprus is on track to exit the excessive deficit procedure two years ahead of the 2016 deadline.

8.25am GMT

Fresh data from the Halifax building society suggests Britain's housing market is cooling.

Prices fell by 0.3% month-on-month in February, Halifax says. That means prices are up by 8.3% over the last year, down from 8.5% in January.

The Halifax indicate average house prices down last month by 0.3 % #timetosell http://t.co/VYYWhF1RF6 pic.twitter.com/cpHgHiXQKh

Consequently, we expect house prices to rise around 5% in 2015.

8.13am GMT

Predictions that Germany's economy is strengthening have taken a knock this morning.

It's a reminder that Germany's growth at the moment is driven by consumption and not by the manufacturing backbone of the economy....

8.01am GMT

Cyprus's finance minister has defended the country's austerity programme, in an interview with Bloomberg TV:

#Cyrpus finance minister Georgiades tells @FerroTV: Our reform and consolidation plan is delivering.

#Cyprus finance minister Georgiades tells @FerroTV:We look fwrd to participating fully in the #ECB #QE program which will start now.

7.51am GMT

Today's European Central Bank meeting in Nicosia comes ahead of the two-year anniversary of Cyprus's bailout deal this month.

Some 18 groups organized the event, including left-wing trade unions, teacher and family groups, as well as student organizations.

Some protesters carried banners reading, "End to austerity, we want jobs," and "Save the people, not profits and banks."

7.43am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The Bank of England is facing an unprecedented criminal investigation by the Serious Fraud Office over emergency lending measures it took at the height of the credit crisis to inject cash into financial markets.

In late 2007 and early 2008, as the authorities struggled to prevent financial markets from freezing up, banks were invited to bid to borrow funds from the Bank of England, in exchange for collateral, in a series of so-called "auctions".

"There are no preparations for a third credit package and the country does not need it."

Varoufakis: Greece does NOT need a third bailout - http://t.co/zeQ23R1nZb pic.twitter.com/hiPeq9PAvS