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Because it is clearly a programme designed with Spain in mind, analysts are asking how soon Mr Rajoy will raise his hand. Critics warned that if he waited too long, he would risk reviving the investor fears that drove interest rates to unsustainable high levels earlier this summer.
So far, Mr Rajoy has been circumspect about tipping his hand. He has financial reasons, and even bigger political ones, for proceeding with caution. To begin with, since the onset of the euro debt crisis, the central bank has purchased more than €200 billion, or $255 billion, in bonds from vulnerable governments — including close to €50 billion in bonds from Greece — with little to show for it.
The new wrinkle this time is that the bond-buying will be “unlimited”. That might sound like the central bank will do whatever it takes to bid the interest rates on Spanish bonds down to an affordable range — a level that would let the Rajoy government continue financing its debt and its basic operations.
But to ensure that governments hew to the budget-cutting timetables they have already agreed to with the eurozone, the central bank will limit the bond purchases to debt with maturities of three years or less. The problem for Spain is that two-thirds of its debt is in bonds with maturities much longer than that. What is more, to receive aid from the central bank’s programme, Mr Rajoy will need to agree to even closer financial scrutiny from European officials — and possibly from the International Monetary Fund.
That is where politics enters Mr Rajoy’s calculus. Because his Popular Party won a landslide victory in a general election last November, Mr Rajoy is among the few European leaders to hold a comfortable parliamentary majority. But polls show his popularity plunging, and Mr Rajoy faces two regional elections next month, including one in his home region of Galicia. The other regional election, in the Basque Country, could add to Mr Rajoy’s headache should the outcome confirm the ascendancy of Bildu, a recently-formed independence party. Mr Rajoy’s austerity drive has been straining relations between Madrid and the regional governments, some of which have already asked for emergency financing from the central government that blames them for most of last year’s blown budget.