11th September, 2020
Has the ECB done enough?
The European Central Bank's slightly confusing economic and policy outlook this week saw an upbeat message on the economic recovery combined with long-term inflation forecasts that still see it missing its target by a wide berth over the next 2 years. With market-based inflation expectations contained in swaps and inflation-linked bonds even more pessimistic over that horizon, many are puzzled by the central bank's suggestion it has already eased monetary conditions enough into the pandemic shock and also by its willingness to look through mounting euro currency appreciation despite gentle acknowledgement of its risk. Perhaps it's hoping euro zone fiscal policy will do the rest and the dollar will rebound after the U.S. election - but there's a pretty wide mismatch as it stands.
Chart by Ritvik Carvalho and commentary by Mike Dolan.
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