The Shadow Council expects ECB to communicate its tapering intentions in September

The ECB Shadow Council broadly expects the central bank to communicate its tapering intentions in September at the latest and begin formally reducing its asset-purchasing program in 2018, according to an article published by the German newspaper, Handelsblatt.

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• Compared to three months ago, members raised the inflation forecast from an average of 1.3 to 1.7 percent this year.
• The Shadow Council’s mean forecast for GDP growth for 2017 has been revised upwards by 0.2 percentage points for this year from 1.4 to 1.6 percent.
• Members also have raised their growth forecast for 2018 slightly from 1.4 to 1.5 percent.
• Most members of the Shadow Council believe the ECB should stay the course in its current monthly asset purchasing program. 
• Some members argued heightened political risks should keep the program going for longer.
• A few members called on the ECB to end QE immediately, given growing financial risks to bank balance sheets and the fact that the euro zone’s inflation and growth outlook has improved and the output gap is closing.
  • The ECB Shadow Council is an unofficial panel, independent of the ECB/Eurosystem, and comprising fifteen prominent European economists drawn from academia, financial institutions, consultancies, companies and research institutes.