13 Feb 2015
Exploring impact of the ECB QE announcement on asset prices – GS
FXStreet (Barcelona) - The Goldman Sachs Research Team, explores the impact of the ECB’s asset purchase announcement on asset prices, and comments that although asset prices have moved in the right direction but its probable impact on the CPI is uncertain.
Key Quotes
“Our event study analysis suggests that the ECB’s announcement of sovereign purchases has supported Euro asset prices – in particular, riskfree longer-term rates and the exchange rate – reflecting the normal channels of transmission of QE.”
“Yet (on the basis of a comparison with similar studies of the Federal Reserve’s large-scale asset purchase programmes), the impact of the ECB’s January QE announcement on asset markets may have been smaller than the equivalent in other jurisdictions.”
“The impact of the ECB’s announcement of QE on asset prices has worked in the expected direction, serving to ease market conditions. But it is too early to judge the strength of the pass-through of these initial market responses into household and corporate spending, and ultimately consumer price inflation.”
“Given the bank-centred character of the Euro area financial system and evidence pointing to weak wealth effects on household consumption, there are reasons for some caution in this regard.”
Key Quotes
“Our event study analysis suggests that the ECB’s announcement of sovereign purchases has supported Euro asset prices – in particular, riskfree longer-term rates and the exchange rate – reflecting the normal channels of transmission of QE.”
“Yet (on the basis of a comparison with similar studies of the Federal Reserve’s large-scale asset purchase programmes), the impact of the ECB’s January QE announcement on asset markets may have been smaller than the equivalent in other jurisdictions.”
“The impact of the ECB’s announcement of QE on asset prices has worked in the expected direction, serving to ease market conditions. But it is too early to judge the strength of the pass-through of these initial market responses into household and corporate spending, and ultimately consumer price inflation.”
“Given the bank-centred character of the Euro area financial system and evidence pointing to weak wealth effects on household consumption, there are reasons for some caution in this regard.”