A buyer picks up euro coins in a supermarket in Vilnius on January 1, 2015.

Petras Malukas | AFP | Getty Images

A buyer picks up euro coins in a supermarket in Vilnius on January 1, 2015.

At the moment, markets don’t expect any rate hikes in 2018 and the ECB has left the door open to increasing its stimulus if the economic conditions shift.

The ECB announced in October a reduction of its monthly purchases from 60 billion euros ($70.41 billion) to 30 billion euros, starting in January and lasting until at least September.

Cates from Nomura believes that core inflation will be higher in 2018 compared to the central bank’s forecasts. If this materializes, it would pressure the bank to lift the stimulus pedal even further.

However, Cates warned that political instability could prove to be a negative for the economy. The upcoming election in Italy due in the first half of 2018 is seen as a potential risk due to the growing presence of populist parties.

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