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ECB: A very low bar for upside surprises on inflation - TDS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 14, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    James Rossiter, Senior Global Strategist at TDS, suggests that the ECB’s Staff Macroeconomic Projections significantly revised down the profile for inflation in 2016 and 2017.

    Key Quotes

    “But the forecast contains numerous assumptions that set a low bar for the ECB to be surprised on the upside by the data, implying a potentially high bar for new policy easing.

    The Governing Council will be happy to see these positive inflation surprises revealed, and President Draghi will feel justified by his statement that they are done cutting rates.

    President Draghi will have delivered one final monetary push to the euro area economy and inflation will bounce off its lows and return toward target. This is a much more appealing place for a central banker to be in than a more balanced forecast where surprises might come on both sides. If inflation ends up above 0.1% in 2016, the ECB will be able to claim success with its newest policies, even if it is really just a case of engineering the surprise.”
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