The European Central Bank would need to buy assets worth €1 trillion ($1.4 trillion) to lift inflation by as little as a fifth of a percentage point, according to an internal assessment of quantitative easing.
The estimate, first reported by Frankfurter Allgemeine Zeitung newspaper but confirmed by a person familiar with its contents, comes a day after the ECB gave its strongest hint yet that it is prepared to embrace bond-buying to prevent the euro zone from sliding into deflation, or even a long period of low inflation.
The estimate, which is based on just one of a number of options for QE that policy makers are considering, shows that €1tn of purchases of euro-denominated securities over the course of a year, or €80 billion a month, could add between 0.2 and 0.8 percentage points to inflation in 2016.
The ECB is expecting a figure of 1.5 per cent in two years meaning QE could also potentially take inflation above the central bank’s target rate of just below 2 per cent.
