Comments from Goldman Sachs on the next round of easing coming up from the European Central Bank
- This from European economics group at GS
- Says Draghi is determined to intensify the fight against low inflation
GS expects more easing at the March 10 meeting
- Expect a 10 basis point cut in the deposit rate (that will take it to negative 40bp)
- Expect an extension of the ECB QE programme to September 2017
GS expect these actions will increase volatility and there is potential to lead to unintended tighter financial conditions:
- "Investors see negative rates as detrimental for banks ...
- The extension of QE would fuel concerns over the scarcity of German Bunds
- Raising questions over the long-term viability of the present policy stance"