ECB could take a further step this year - Commerzbank

Dr Jörg Krämer, Chief Economist at Commerzbank, suggests that as core inflation should tend to disappoint the ECB and the euro looks set to continue appreciating, we expect the central bank to ease its monetary policy again later this year.

Key Quotes

“Persistently low inflation expectations could increase the ECB’s willingness to take further measures.

But we expect no further steps in the next few months, as the ECB affirms that it is now necessary to be patient and implement the measures decided in March. Though the ECB will likely revise its projection for core inflation as early as June, it may argue that this was foreseeable and therefore justifies the sizeable measures decided in March.

Given the notable appreciation of the euro which we expect in the course of H2, the ECB will probably cut its projection for core inflation later to levels even below our forecast and then decide to ease policy further.”