ECB likely to be forced to ease again if oil price remains low – Danske Bank

FXStreet (Delhi) - Research Team at Danske Bank, suggests that in the scenario of a persistent low oil price, we expect the ECB to be forced to ease again as financial conditions tighten through higher real rates and the continued upward pressure on the effective euro.

Key Quotes

“We expect the first line of defence to be a 6M extension of QE purchases for the following reasons.

• Inflation picks up later, so purchases are needed for longer.

• It should be easier to form consensus about this than a rate cut.

• The ECB will review technical QE parameters in the spring.

• The ECB continues to argue that the QE programme is flexible in terms of adjusting its size, composition and duration.”