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EURO

Spain bond yields hit record low

The yield on 10-year Spanish government bonds fell to record lows on Thursday after the European Central Bank announced it was setting out on a massive bond buying programme.

Spain bond yields hit record low
Mario Draghi, President of the European Central Bank, ECB addresses the media during a press conference Frankfurt on January 22, 2015. Photo: Daniel Roland/AFP

At 1400 GMT the rate of return to investors on benchmark Spanish 10-year bonds hit a record low of 1.450 percent, down from 1.530 percent the night before.

Meanwhile the yield on Italian 10-year bonds hit a record of 1.609 percent, down from 1.691 percent on Wednesday.

The news came after the ECB announced a €1.1 trillion ($1.3 trillion) bond buying programme.

The ECB announced that it will buy €60 billion of European debt every month from March 2015 until September 2016.

"The combined monthly purchases of public and private sector securities will amount to €60 billion" ECB head Mario Draghi told assembled journalists at a press conference in Frankfurt.

The bond-buying programme will continue "until we see a sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, 2%", he added.

The Euro immediately dropped sharply against the US dollar on the news. 

ECONOMY

Spain’s De Guindos in line for ECB job after Irish candidate withdraws

Irish central bank chief Philip Lane pulled out of the race for the vice-presidency of the European Central Bank on Monday, leaving favourite Spanish Economy Minister Luis De Guindos the only candidate.

Spain's De Guindos in line for ECB job after Irish candidate withdraws
Photo: AFP

Eurozone finance ministers were widely expected to pick their Spanish peer for the top job, the first of a series of changes at the ECB over the coming two years, including the post of the chief of the bank currently held by Italian Mario Draghi.

“I will be withdrawing Philip's name and I have spoken to Minister De Guindos and wished him the best of luck this evening,” Irish Finance Minister Paschal Donohoe said as he arrived for talks to fill the post with his
eurozone counterparts.   

The ministers “will make a decision tonight that will be in the best interest of the functioning and success of the European Central Bank,” he added.

The choice comes despite the scepticism of senior European lawmakers who said they preferred Lane, who is not a politician, over his rival after an informal hearing last week.

MEPs raise concerns over de Guindos as ECB candidate

EU leaders will ultimately choose the successor to Portugal's Vitor Constancio, whose eight-year mandate expires in May, as the ECB's number two.   

That decision will be taken on March 22 at an EU summit after consultations with the European Parliament and the ECB's Governing Council.   

De Guindos, a veteran of eurozone economic policy, said this month he was “convinced” he will have enough support to clinch the post after Madrid officially nominated him for the job.

De Guindos defended his candidacy, saying he was the longest-serving member of the Eurogroup, which groups eurozone finance ministers.   

He has served as economy minister since Prime Minister Mariano Rajoy's conservative government came to power in 2011.   

As economy minister he oversaw the clean-up of Spain's banking industry that collapsed after a housing boom imploded during the worst of the eurozone debt crisis.

In exchange Spain had to impose tough austerity measures to reduce the county's public deficit.

Before entering the government, De Guindos led the Iberian unit of Lehman Brothers between 2006 and 2008 before the investment bank collapsed.