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ECB on the brink

Published Wednesday, January 21st, 2015

It is the actions of central banks rather than oil prices that are currently taking the headlines. Will they or won’t they launch QE? Will it be a watered down version and will it be as low €500 billion or as high as €1 billion? The consensus is that the ECB will make the launch tomorrow; it will be watered down to suit Germany; it will be worth at least €600 billion; it will lift equity and bond prices; it will not succeed in lifting eurozone growth or do much for inflation.

If reports are to be believed it is not just German central bankers who oppose QE. Those from the Netherlands, Luxembourg and Estonia are it seems in the same camp. Meanwhile, ex-members of the elite such as the ex-governor of the Bank of England Lord King and ex-US Treasury Secretary Larry Summers do not believe more QE will do much to stimulate growth.

However, one group of people whose confidence is on the up are German investors and analysts. According to the latest ZEW survey their confidence is at an 11-month high. Worries about Russia have been eclipsed by the spur of a weak euro, falling oil prices and of course, QE. They love it even if Angela Merkel does not.

to read the rest of the report, please click here

Posted by David Hufton