The ECB has given euro zone economies another massive jolt of stimulus.
On Thursday (June 4) the region’s central bank raised its planned bond purchases to 1.35 trillion euros - about 1.5 trillion dollars.
The move exceeded market expectations, driving a rally for stocks and the euro.
Bank chief Christine Lagarde said dramatic action was required:
"The June euro systems staff macro economic projections see growth declining at an unprecedented pace in the second quarter of this year before rebounding again in the second half, crucially helped by the sizeable support from fiscal and monetary policy.”
The announcement came just days after Berlin set out its own massive stimulus plan.
And on top of the European Commission’s 750 billion euro recovery fund.
But it may ramp up a battle with Germany’s Constitutional Court.
It has already ruled that the ECB is exceeding its mandate with an existing asset purchase programme.
Lagarde said a way would be found to resolve the dispute:
“We are confident that a good solution will be found, a good solution that will not compromise the ECB's independence, will not compromise the primacy of the European Union law or the ruling of the European Court of Justice.”
Lagarde quashed rumours that the ECB would start buying sub-investment grade debt - so-called junk bonds.
Though the U.S. Federal Reserve is already doing that, she says Frankfurt policymakers did not even discuss the idea.