ECB set to extend QE despite rising inflation in coming months – Danske Bank

Research Team at Danske Bank, notes that the ECB has since the QE announcement in January 2015 argued that the programme will run until the Governing Council sees ‘a sustained adjustment in the path of inflation consistent with its inflation aim’.

Key Quotes

“In coming months, inflation is set to pick up, but this is due largely to base effects of the past oil price decline. Related to this, prominent ECB members have recently emphasised the lack of a convincing upward trend in underlying price pressures.

Based on this, we do not believe the ECB will end QE purchases, although headline inflation will move closer to the 2% target as the rise in inflation does not reflect higher underlying price pressure.”