Independent Strategy

Eurozone – when ‘whatever it takes’ ain’t enough

Draghi’s rhetoric only goes so far. The ECB is failing to meet its inflation mandate by an increasing margin. The impact of policy measures enacted so far faded quickly. While lending rates have converged, credit growth is tepid. Inflation expectations remain dislocated. So the ECB will have to do more, including additional asset purchases and TLTRO-type measures. They may cut the deposit rate further. We remain short the euro versus the US dollar.

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