Following what was the latest effort by the ECB to get ahead of the European Sovereign Debt Crisis markets across continental Europe were broadly higher, but the FTSE 100 was broadly flat.
Meanwhile commentators were split on how long positive sentiment towards the injection of liquidity would keep the rally afloat.
In a fundamentals briefing about the effects of policymakers’ various interventions in markets since the crisis started in 2007, Ben Bennett, credit strategist at L&G Investment Management, said: "When the credit crisis hit policymakers cut interest rates, pumped money into the system through measures such as quantitative easing and running large government deficits. All of these were eminently sensible, but all have knock-on effect that we are seeing now."
The LTRO (both the first and second) is just another method of keeping the system afloat which could lead to unintended consequences.
"The obvious danger is that sectors or asset classes that are being supported by these measures may still weaken or fail once the support is taken away," Bennett added.
But David Miller, partner at Cheviot Asset Management was broadly positive about the LTRO and its effect: "The markets have not really responded to this news, but they were always going to take any figures as good news rather than bad news.
"The LTRO is a good deal for banks and has insulated them from liquidity problems – one of the main pre-Christmas worries. The US used a similar mechanism back in 2008 and that paid off well, now the Europeans are following suit."
