"The European Central Bank refrained from cutting interest rates today as President Mario Draghi prepares to unveil a bond-purchase plan to save the euro," Bloomberg News writes. It adds that:
"Draghi pledged more than a month ago to do what's needed to preserve the single currency. Now he's under pressure to follow through with details of a bond-purchase plan to lower borrowing costs in Spain and Italy and prevent a breakup of Europe's monetary union. Expectations have built to such an extent that Draghi risks losing credibility unless he delivers, economists and investors said."
According to The Wall Street Journal, "officials meeting Thursday will weigh a plan to purchase government bonds with maturities up to around three years, people familiar with the matter said, with a possibility they could extend slightly longer. The proposal wouldn't place limits on the amount of bonds purchased, the people said, giving the ECB maximum flexibility to stabilize financial markets."
NPR's Jim Zarroli adds that "in recent weeks Draghi has dropped hints that he may back a round of long-term bond purchases from countries such as Italy and Spain. Such a move would help lower the borrowing costs for the countries and stabilize the precarious financial conditions they face."
Update at 8:50 a.m. ET. Bond-Buying Plan Announced:
The Wall Street Journal, which is live blogginga news conference Draghi is holding in Frankfurt, has posted the ECB president's statement about the central bank's bond-buying plan. He's calling the purchases "Outright Monetary Transactions (OMTs)" and says they will help "safeguard the monetary policy transmission mechanism in all countries of the euro area." In other words, they will help shore up the euro and keep its countries together.
The Financial Times is also live blogging, and writes that Draghi said the bank will be buying bonds with maturities "between one and three years." It also notes that the euro "does NOT like this. Sliding now to a loss on the day."
And with tongue firmly in cheek, the FT posts this:
"Draghi says there was one dissenting view on the board. He won't say who that was. We couldn't possi
IT WAS THE GERMANSbly guess."
Our friends at Planet Money are planning to have more on all this.