Im guy johnson. Francine im francine lacqua. We are getting breaking news out of italy. Fourth quarter gdp figures, flat. Down some 0. 5 year on year. Guy not exactly the rosy outlook you would hope for, certainly not the progress you would have hoped for if you were mario draghi. Lets shift years and talk about what the central bank is going to do today. The recipient the European Central bank goes on tour once and a while and it is on cyprus today. Francine the ecb will talk about it bond buying program, how it deals with greece. Jonathan ferro is in cyprus for the meeting. John, over to you. Thank you very much, francine. That is the big focus today. Youve seen the markets react. What does it mean for the real economy and what does it mean for countries on the periphery of europe like cyprus eston mark joining me now is the former cypriot president , amanda took cyprus into the European Union. Great to have you with us this morning. Ive had a couple of people say the conversation those guys are having behind us will make no difference to cyprus. What do you think . Unfortunately not because neither cyprus nor greece will benefit from quantitative easing for the time being. Jonathan you cant buy debt for now. Because unfortunately, our parliament has been delaying the foreclosures. Jonathan what is your message to the government . Why is it taking so long . It is not the cypriot government to blame. It is the way parliament is behaving. In my opinion, they are playing games. At the end of the day, they will approve, but in the meantime, cyprus is paying the price. Jonathan you are also heavily exposed to russia. Talk to me about relations with russia. The sanctions makes it very difficult. A lot of tourism from russia is not coming anymore. To start with, there is no real question of exposure to russia in that sense. Cyprus and russia always had friendly relations and i think thats one of the characteristics of cyprus, friendly relations with all countries because we are a small country. Cyprus russian tourists were coming to cyprus for many reasons. You see the weather, how nice it is. Secondly, the fact that cyprus is an orthodox country has made people feel more comfortable. But the crisis in russia, the crisis of the ruble and so on is affecting. Im afraid that the number of tourists that come to cyprus this year will be smaller than before. Jonathan in terms of foreign policy, things are tense. Cyprus is finding itself in the middle of that. You see the current president talking to putin. Wait a minute wait a minute. This thing about the ports of cyprus, there is nothing to worry about. What they are providing is humanitarian facilities. They are the same for everyone. Cyprus cannot afford to have been relations with russia but cyprus is a member of the European Union and has to follow that policy. Jonathan do you think there can be a bridge between the European Union via cyprus towards russia . I would be very happy to see that happening but im afraid that would be a very small bridge. Jonathan what is the biggest headache right now . Is it the fragile agreement between grace, or the sanctions . Wait a minute. We are not exposed to grace. Jonathan economically, you are. We are not. We used to be, but since the eurogroup decision which cost cyprus a hell of a lot of money , which i think was an unfair decision, but it was there. There is no exposure to the greek market. What there is is a lot of cypriot businessman interested in buying grace, but this is not serious for the cyprus economy. You asked about whether cyprus can really pray a role. It cannot. We are too small to play a role. But we ought to be friendly with everybody. Between us coming to the russian problem, i dont think we will solve the problem with sanctions. It has to be a diplomatic solution. Jonathan going back to greece, why do you think it was unfair . What was unfair was what happened to cyprus. For the first time in the history of the European Union, they decided to pay that it would be the depositor that would pay. In no other country has that ever happened. That was very unfair. They know now that it was unfair. You cannot be unfair to france or italy. Jonathan also the first country in the eurozone to have capital controls. Some people say it is a second great membership of the eurozone. For you, is it better to be in that out . Come on. Is it better to live or to die . Cyprus and all the European Countries jonathan what about the eurozone . The eurozone is the future of the European Union. It was a great idea. We have to get together. Otherwise, there will be a third world war. At the same time, they made the mistake of thinking that we start with a little bit and then it comes to others. That is the trouble. The nations got the advantage of being in the European Union but they continue behaving as if they were not in the European Union. As you know, in reality, you cannot have it like that. You have to give up part of your National Independence if you want the European Union to be functioning. Jonathan the governing Council Press conference in the ecb will probably be dominated with questions about greece. You say to live or die. Is that the same message to greece . Of course. You see when Prime Minister tsipras came back, he said we won a victory. We made in the eurozone and in the eurogroup. That is the best proof that that is the desire of greece. Of course, to implement it will take a lot of effort. You cannot please everybody. Jonathan george, weve got to leave it there. The former president of cyprus joining us live. You cant make everyone happy. Ill leave you guys with that. Francine thank you. Smaller countries feel like they have been treated not fairly by the eurozone but like we heard from the former president of cyprus, a lot of them dont have a choice. Guy when you are that small you have to play by those rules. Stay with us. We will bring you the ecb News Conference life and in full. It all starts at 1 30 u. K. Time. Francine lets get eurodollar of for you. There you go 1. 1045. Guy amazing. The impact of qe, some would argue, already priced in. The fact that the policy is going to be put into place already manifesting itself in the market. You can see that in the shape of the curves. Look at what you are seeing. Francine if you look at the duration, the spread between the spanish and german fiveyear narrowed to 59 basis points. That is the tightest since 2010. We had a similar spread last week on the 10year italian and german. Guy it tells you that the pricing of credit risk is maybe a little difficult at the moment. These are meant to the riskfree, but as we all know that could change. Francine it can change very quickly. That brings us to todays twitter question. Can draghi save the euro project . That is our twitter question of the day. We will round of some of the answers later in the program. Guy coming up, the bank of england faces a probe. We will bring you the details of that, plus we have an exclusive interview with Qatar Airways ceo. Words about the airlines subsidy viewed with delta. Those comments coming up here on bloomberg. Francine welcome back to the pulse. We are live from bloomberg tv and radio. Guy the euro sliding to an 11year low. At the bank of england, the mpc meets. Interest rate at 0. 5 . Lets get some analysis on all of this. We are joined by jpmorgans Asset Management strategist for the u. K. And europe. Good morning, stephanie. Lets talk about the ecb. Details from draghi today on the qe program. When you talk to people, any sense that most of this is priced in . Some of the debate about how long you are going to see an effect on yields when youve already seen Interest Rates fall quite a lot even before the announcement of quantitative easing and since then, so how much more can you get . In the short term, there is more of a practical concern. Youve seen prices go so high and yields go so low that you arent going to want to sell to the European Central bank when the expectation is that yields might carry on going lower. There will be some interest about the Technical Details how they are going to go forward with these processes these purchases. They said they will do it according to the t. We dont quite know how they are going to manage that. Are they going to pay any price for these bonds . That will be interesting to hear. Francine stephanie, you are absolutely right. There might not be enough people willing to give back these bonds. You were saying that yields are so low it seems we dont really price the risk in. But we still have huge political risks in the eurozone. Guest i think thats the dynamic for this year. If you look at the economics, even if you think there are some longterm difficult problems for the eurozone, and any economist would say they have a hard road to walk, but relative to a year ago, theyre of some big positives and quantitative easing is one of them. You also have Credit Demand picking up. You have a bit less budget austerity. The politics are still a question mark. Can the politics get well fast enough . The politics may be still deteriorating in some countries. Greece is a symbol of that. Guy one of the ways to get the on economics to improve would be to get credit into the real economy. I wonder about the effect of qe thus far. It seems to be going down the currency channel rather than manifesting itself in the banking channel by which most of europe gets its credit. Guest this is part of the problem. Although the ecb might find it can still be effective, it is white late quite late. Other Central Banks were able to act when the price was higher. We have our doubts about whether quantitative easing is going to be transforming. They are very reliant on the currency relative to the Federal Reserve or the bank of england. Even in the u. K. , there were doubts about the banking channel. I think banks are so important for the funding of the european real economy. Particularly for small and mediumsized companies. You have seen some improvement in the funding situation and a bit of a pickup in demand. Thats what tells you the most important thing, that people are more confident in the european economy. Theres more confidence in some countries. Still maybe not so much confidence in france and italy. Thats the big driver. Quantitative easing can help and i think it has picked a good time. Youve probably got some forward momentum, but it cant be the only thing. Francine sometimes it works at the beginning and stops working as much so you end of extending the Balance Sheet for not that much. Lets move on to the boe. You have this Huge Movement from the ecb. The rest of the world 12 major Central Banks, 20 major Central Banks in all, are easing. Will the boe really be able to raise Interest Rates this year . Guest i think it has become more difficult to hang on to that view. I think the Federal Reserve will raise Interest Rates unless something significant happens in europe or they see something significant in the u. S. Economy. It is slightly different for the u. K. I think it has become harder to say they are going to be around the same time as the fed. It is interesting, if you listen to the conversations, the speeches of senior members of the bank of england, mark carney, other members, theyve been quite clear. Theyve been trying almost as hard as janet yellen in the u. S. To keep that option open of raising rates sooner than the market expects. Weve almost got to the point where we are saying, rates are never going up in the u. K. If you look at the strength of the u. K. Economy, that is a hard case to sustain. I think we may end of thinking that we pushed it out too far. Guy how do you think the rate trajectory works in their mind . Do you think it is, people are in a position where they understand rates can go up and dont spend so much on credit or do you think it is a fairly sequential series of rate hikes . Guest i think the most important tradeoff that both the u. S. And u. K. Central banks face is about how quickly they go now and what does that by them in terms of how gradually they can raise rates after that . I think all would say, if they could they would prefer to get a rate rise this year. In the u. S. s case, by the summer or autumn. They would feel that that bought them the capacity to go more slowly. Also, the longterm prognosis is not whether this happens in june or september. The issue is, it has been such a long time, especially in the case of the u. S. If you shocked people or surprised people and caused a lot of instability, cap you really won that credibility . The belief of many in the markets is they have to move faster. Francine stephanie, if you look at the strength of the fed, the power it has, the u. K. Would be foolish to act before. They are countering qe across the world and it would be quite dangerous for the boe to be the first one to raise rates in this environment. Guest i was one of those who thought before the oil price fell that may the u. K. Would go first. I thought it was quite a narrow call. It is getting harder to sustain that for the reasons you say and because oil prices are having such a dramatic affect in the u. K. You are right in a sense. It would be difficult for them to go it alone. But you never know. Theres also a sense that the Federal Reserve it is so momentous when they raise rates, to have somebody else test the water, but i agree, it is much harder now. I would be very surprised now if the u. K. Raised rates before the u. S. Guy i was looking at a Morgan Stanley survey which calculates how far out the next rate rise is going to be. I think it is 10 months now, the first rate hike from the u. K. Do you think that is right . Guest i think if the economy proceeds as we think, shortterm stability around the election that feels a bit far away to me. I dont see why you wouldnt have enough pickup in the real economy, enough of a boost from cheap oil and enough of an increase in wages, to have been moved before that. We keep on pushing it into the future. They havent been wrong yet. Francine one of our other top stories today, investigating liquidity options at the boe during the financial crisis. The general mood in the u. K. Is there are a lot of investigations going on. It seems that is different from other countries because we are taking it so seriously. What does it mean for investors . Guest a lot of people in the public are upset about bankers not going to prison. This is a slightly different thing. There is a concern about the bank of england not having enough internal constraint. Mark carney has said there needs to be much tougher approach inside the bank of england. They were a bit oldfashioned maybe in the way they dotted their is and crossed their ts. There was a lot of action taken in the financial crisis which they want to explore now. There is some sympathy for them. Francine thats a very fair. Stephanie, thank you very much. Francine ok guy ok, we have both the ecb and boe rate decisions later in the show. We will be taking the News Conference from mario draghi life and in full. We will take a break. Francine welcome back to the pulse. Guy now, here are bloombergs top headlines. A warning that this first story contains graphic images. Francine the u. S. Ambassador to south korea is recovering after being attacked with a knife by a north korea sympathizer. The ambassador suffered a wound to his face. His injuries are not lifethreatening. His assailant has been identified as a south korean who had been previously convicted. Guy russia is accusing the United States of plotting to oust Vladimir Putin by financing opposition groups and encouraging mass demonstrations. Russian Security Council says the u. S. Is funding political groups under the guise of promoting civil societies. Francine as the u. K. General election draws near, debate continues. Prime minister David Cameron has said he will only take part in one televised debate. He has agreed to one appearance with all seven party leaders. Broadcasters has proposed three debates. Were going to take a break. Back in two minutes. Hes out there. Theres a guy out there whose making a name for himself in a sport where your name and maybe a number are what define you. Somewhere in that pack is a driver that can intimidate the intimidator. A guy that can take the king 7 and make it 8. Heck. Maybe even 9. Make no mistake about it. Theyre out there. I guarantee it. Welcome to the Nascar Xfinity series. Francine welcome back to the pulse live from bloombergs European Headquarters in london. Guy china has lowered its growth target. The countrys premier set out an Economic Growth target of around 7 . That is down from 7. 5 last year and is the lowest level in 15 years. Francine roz, what was the message from the leadership . Well, if you listen to what li keqiang has said, our capacity is an efficient, overcapacity is a problem, and the foundation is week. It sounds like doom and gloom. Really, this 7 figure, many economists think is a realistic figure for china to aim for. The economy has been slow. The government has been worried. There was a rate cut just a few days ago. The government is worried about how the economy is doing, but this goal of 7 will give the policymakers aim to pursue growth, while also pursuing longterm goals which are important for china, such as reform. This is what li had to say this morning at the mvc. We need to maintain policy continuity while moving forward with reform and structural adjustment. We need to develop twin engines to drive development. Popular entrepreneurship and innovation paired with increased supplies of public goods and services. This will ensure tha