ECB: voting for QEReport Date: 11th December, 2014
The ECB is set to introduce ‘full blown’ quantitative easing (QE) early in 2015. Other methods of credit injections will fail to expand the ECB’s balance sheet sufficiently, meaning QE is the only way to get the balance sheet back to its ‘intended’ size. It is doubtful QE will boost the real economy directly. But it will shift portfolios from safe assets to riskier ones. And it will weaken the euro further. We remain short the euro versus the dollar with a target of 1.15 by mid-2015 and a move towards parity further on. We expect Eurozone equities to outperform as QE is implemented.
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