Fortunately, the ECB positively surprised the market in most every way. It is a historic day for central banking in Europe, and therefore, for the world too, even if one thinks the economic effects will be marginal. In a sense, the ECB is now the most aggressive central bank in the G-3 as it has both negative policy rates and sovereign QE, but there are some factors to consider going forward.
Firstly, the E60BB/month figure represents gross purchases, which includes the existing ABS and covered bond programs, meaning that the net figure is more like E50BB/month assuming some reduction in these other programs' monthly accumulation in the months ahead. Thus, this basically matches the consensus expectation of E50BB/month. Furthermore, if any debt already held by the ECB system expires during the period, it will be directly offset with purchases under the new plan.
Even though the ECB allowed the purchase of bonds with negative interest rates, it is not clear if the Bundesbank and other conservative central banks will purchase such, meaning that the E60BB/month target might not be achieved. Allowing purchases in the 2-30Y maturity does open up the possibility of going further out on the yield curve to avoid negative yields, but the Bundesbank might not want to do that either with its portion of the German allotment (which is a large portion of the total plan) because it is rather risky.
The market was pleased with the perceived commitment (but is officially just an "intention") of monthly purchases through September 2016 and perhaps thereafter. Many thought that 2016 would not be officially included in the "commitment" but everyone should realize that if the ECB is satisfied with the outlook, it can halt QE anytime. Thus, essentially, the ECB is actually data-dependent but with a patient perspective.
As for risk sharing, the consensus was mixed on this factor, but the announced 20% risk sharing level sounds right; not too high a figure, as that would frighten the Germans and would let peripheral countries (and France) halt austerity, while too low a figure would mean that there is no Eurozone cohesion and individual central banks would be "on their own."
The lowering of the TLTRO cost by 10 bps was a positive surprise to the market, but many analysts still think it will not help increase bank lending much, as the program is full of conditions and few banks need more liquidity now.
Will this QE be sufficient to overcome headline deflation this year? It may keep the CPI from falling too far below 0% YoY (it was already -0.2% YoY in December) due to a weaker EUR, and consensus even last week was for a positive YoY CPI in the 2H15, so consensus will likely shift even higher now. It is noteworthy to add that the Core CPI, however, is not in deflation, and should remain near 1.0% YoY, in the coming quarters, which is not too worrisome.
The impact on the Eurozone is both economic and political. The economic benefits are fairly standard (lower EUR, even lower interest rates, pushing up risk assets, etc.), while politically, it should help convince periphery countries that the Eurozone has adhesion and that the Germans would not block a further step towards integration. It should help quell anti-Euro sentiment and radical parties in the periphery; however, we must watch if Greece votes a chaotic party into leadership this weekend. But QE is not a panacea, and Europe still needs to reform its economic, governmental and legal systems, especially within the periphery, and cut corruption.
In sum, this QE announcement was a major step forward for Eurozone. It is not without dangers and questions about implementation, however, so markets should not get over-enthusiastic about it.