11 Apr 2014
Expectations continue to build around the ECB - Rabobank
FXStreet (Guatemala) - Strategists at Rabobank explained that expectations of the ECB following the BoJ, the Fed and the BoE down the QE route have, unsurprisingly, been on the rise of late.
Key Quotes:
“A Reuters survey published on April 8 saw the 59 economists polled ascribe a 30% chance to the ECB undertaking a European variant of quantitative easing”.
“This compares to the 18% median produced by the same survey back in January. Meanwhile, almost one in three of the economists polled this time round (17) put the odds of ECB QE at greater than 50% and with most of these expecting this unconventional trigger would be pulled within
the next few months. Our own ECB watcher, Elwin de Groot, gauges the odds of QE in Europe to stand at a far from insignificant 40%”.
“One important reason why QE is not his base case is his view that the disinflationary pressures currently in evidence across the region are, in large part, the result of (1) structural reforms put in place in the periphery during the crisis era and, hence, represent “good” disinflation and (2) food and energy price declines and therefore of a benign nature. Nevertheless, he does concede that the odds of QE in the Eurozone would shorten very rapidly should inflation not pick-up again near term (although such a lack of pick-up in inflation is not what he, or the ECB, expects)”.
Key Quotes:
“A Reuters survey published on April 8 saw the 59 economists polled ascribe a 30% chance to the ECB undertaking a European variant of quantitative easing”.
“This compares to the 18% median produced by the same survey back in January. Meanwhile, almost one in three of the economists polled this time round (17) put the odds of ECB QE at greater than 50% and with most of these expecting this unconventional trigger would be pulled within
the next few months. Our own ECB watcher, Elwin de Groot, gauges the odds of QE in Europe to stand at a far from insignificant 40%”.
“One important reason why QE is not his base case is his view that the disinflationary pressures currently in evidence across the region are, in large part, the result of (1) structural reforms put in place in the periphery during the crisis era and, hence, represent “good” disinflation and (2) food and energy price declines and therefore of a benign nature. Nevertheless, he does concede that the odds of QE in the Eurozone would shorten very rapidly should inflation not pick-up again near term (although such a lack of pick-up in inflation is not what he, or the ECB, expects)”.