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ECB QE likely extended past March 2017 – Goldman Sachs

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 13, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Mumbai) - Goldman Sachs Group Inc. Francesco Garzarelli, London-based co-head of fixed-income strategy at the bank, believes that the European Central Bank (ECB) would go for QE expansion rather than slashing rates in the future. Mr. Garzarelli also added that the QE may extend well beyond March 2017.

    Key Quotes:

    “The ECB is probably in the direction of more QE rather than more negative rates,”

    “The deposit rate gets you a weaker euro and a boost to inflation quicker, but it has a political cost domestically and internationally.”

    On the other hand, asset purchases address the “bigger problem of Europe” by freeing governments to follow through with structural reforms.

    “The more of that debt gets onto the central-bank balance sheet, the more of it becomes sustainable,”

    “That’s a more targeted policy for the euro area, and that’s where we think that if they deliver more, it would come through that way.”

    While an extension of QE beyond the current end-date of March 2017 is “probable.”
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