At the end of August, Schroders became the latest investor to upgrade its growth forecasts for the euro area – to 2.1% for 2017, up from 1.8% previously and to 1.9% for next year up from 1.8%.
As fears over rate rises grow, ECB president Mario Draghi affirmed at the Kansas City Federal Reserve shindig at Jackson Hole that: “The global recovery is firming up.” Draghi was careful in public to point out that while the US recovery is more advanced, in Europe “the consolidation of the recovery is at an earlier stage”. But minutes of the July meeting of the ECB governing council, published in mid-August, show at least one unnamed member arguing that economic expansion is increasingly self-sustaining and hence has become less dependent on monetary policy accommodation.
Azad Zangana, senior European economist and strategist at Schroders, says: “We continue to expect the ECB to extend QE into 2018, albeit with smaller monthly purchases and eventually being faded out over the year.” He suggests the ECB could announce a tightening of policy as early as this September.
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Thomas |
There’s no consensus on this though.
