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ECB Disappoints; Does it matter? - Wells Fargo

FXStreet (Córdoba) - According to Jay Bryson, global economist at Wells Fargo, a faster pace of bond purchases would have been desirable but the decision not to do it will not affect significantly Euro-zone growth.

Key Quotes:

“Only time will tell if these immediate market reactions will be reversed. Although we are also a bit disappointed that the ECB did not increase the pace of its bond purchases today, we are not inclined to make significant changes to our forecasts. “

“The ECB is not scaling back the pace of its bond purchases. It simply decided not to increase those monthly purchases. If the current monthly purchases are effective in boosting economic activity only at the margin, then a modest increase in the monthly pace, had it transpired, would have been even more marginal. Would a faster pace of bond purchases have been desirable? Sure. Will the decision to not increase the size of the monthly bond purchases mean that growth in the Eurozone will now weaken significantly? No."

“Our currency strategists are also not inclined to make major changes to their exchange rate forecasts. Although they acknowledge that the euro, which has depreciated against the U.S. dollar in recent weeks, could enter a consolidative and corrective phase in the near term, they believe that the overall downward trend of the euro vis-à-vis the greenback will remain intact. With the Fed about to become less accommodative and with the ECB continuing to maintain an accommodative policy stance, the euro should trend lower over the medium term.”

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