The ECB announced the recalibration of its asset purchase program (APP), with an open end, starting from January 2018, as broadly expected: 1) monthly purchases will be halved from EUR 60 bn to EUR 30 bn; 2) purchases will last until September 2018, but with an open-end, which could run beyond if necessary    More important, in order to continue to provide favorable liquidity and financial conditions, the ECB announced to continue to reinvest the principal payments from maturing securities under the APP for an extended period well beyond the end of net purchases and as long as necessary    Besides, the ECB re-emphasized its guidance on policy rates that the interest rates will be kept well beyond the net asset purchases, which should be able to push back any rate hike expectations into 2019 and maintain the highly accommodative financial conditions    The recalibration mainly reflects the central banks’ confidence in the robust economic growth, but inflation remained subdued: although inflation expectations slightly recovered recently due to the weakened euro and the rising oil price, but there is still not much evidence to show that underlining inflation is on an upward trend; thus, an ample degree of monetary stimulus is still needed    The dovish stance came from the reinvestment of maturing securities, which is estimated to be averaged around EUR 10 bn per month for 2018; and on top of the net purchases, the gross purchase could be more than EUR 40 bn per month, higher than market expectations    Market reacted to the dovish recalibration with falling bond yields and further weakening of the euro against the dollar

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