6 Mar 2015
ECB Meeting: Optimism for closure of the output gap by 2017 – DB
FXStreet (Barcelona) - Economists at Deutsche Bank, note that with the ECB optimistic that growth response due to QE could lead to closure of the output gap by 2017, the FX related infused inflation could assist for the same even if growth disappoints by 2017.
Key Quotes
“As we expected, despite the improved picture for economic growth there was no second-guessing of the need for QE by the ECB. The Council is fully committed to the plan to purchase EUR60bn of securities a month until September 2016 and possibly beyond. The ECB is fully employed in the implementation of these plans and sees no need to re-consider the policy for some time to come.”
“ECB President Draghi presented the staff forecast for HICP inflation of 1.8% in 2017 — broadly on target — as conditional on full implementation of QE.”
“The staff is optimistic about the GDP growth response to QE leading to the closure of the output gap by 2017.”
“That said, if our FX strategists are right and QE continues to push the euro lower, the additional FX-related inflation in 2017 could compensate for a wider than expected output gap should growth modestly disappoint.”
Key Quotes
“As we expected, despite the improved picture for economic growth there was no second-guessing of the need for QE by the ECB. The Council is fully committed to the plan to purchase EUR60bn of securities a month until September 2016 and possibly beyond. The ECB is fully employed in the implementation of these plans and sees no need to re-consider the policy for some time to come.”
“ECB President Draghi presented the staff forecast for HICP inflation of 1.8% in 2017 — broadly on target — as conditional on full implementation of QE.”
“The staff is optimistic about the GDP growth response to QE leading to the closure of the output gap by 2017.”
“That said, if our FX strategists are right and QE continues to push the euro lower, the additional FX-related inflation in 2017 could compensate for a wider than expected output gap should growth modestly disappoint.”