ECB’s decision to extend its bond buying program up to Sept. 2018 is strategic.

On Friday, Mario Draghi, the president of the European Central Bank, stated the central bank’s decision to extend its bond-buying program upto September 2018 is central to pushing market expectations for a possible rate hike in the future.

“Asset purchases matter also for the signals they entail about the path of future policy rates: the so-called ‘signaling effect’,” said Draghi in a banking conference.

“The signaling effect of asset purchases has therefore naturally increased in prominence relative to the duration effect.”

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