Flash Note
04/10/2016
Alex Fusté
@AlexfusteAlex
[email protected]
Tapering from the ECB? The end of QE?
Apparently, some ECB officials (that asked not to be identified) have
pointed that there is an informal consensus that asset purchase
program will have to be tapered once a decision is taken to end the
program. Well. This is like saying "when I decide to abstain from
alcohol I will stop drinking".
The same officials that hinted the idea of “tapering” also confirmed
that “they didn’t exclude that QE could still be extended past the
current end-date of March 2017 at the full pace of 80 billion euros” and
added that “the Governing Council has not discussed these topics”.
Well. The only thing I know for certain is what Draghi repeatedly said:
“QE will run, in any case, until the Governing Council sees a sustained
adjustment in the path of inflation”. And the ECB has predicted
inflation will run at 1.6% in 2018 (well below its goal of 2%). You
decide.
I certainly do not know what will happen with the ECB’s QE. I have
largely defended that stopping this highly disruptive expansionary
policy is needed to preserve the healthiness of the global markets. But
for those regular readers, you will appreciate that today for me it is
difficult to envisage this possibility. We will see.
Kind regards
Alex Fusté
Chief Economist
Andbank
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