Euro area: What’s in store after the QE? – Goldman Sachs

FXStreet (Delhi) – Research Team at Goldman Sachs, suggests that if Euro area inflation increases, the debate on ending QE will come to the fore and the consequences of a less accommodative monetary policy stance for EMU high debt sovereigns will be relevant.

Key Quotes

“That said, what if our economics’ forecasts are wrong, the Euro area stagnates and inflation remains much lower than the ECB’s target? Would the Euro area follow Japan and put in place more coordination between monetary and fiscal policy? Would progress towards a fiscal and political union be made? Or will we be talking about the potential break-up of the Euro again?”

“Given that the institutional set-up of the Euro area remains incomplete, these themes will very likely become topical again over our forecast horizon. In the near term, the debate on immigration and security issues, and the economic and political implications, particularly in the run-up to elections, will likely dominate the political landscape.”