CIBC Research discusses the EUR outlook and maintains a bullish view in the medium-term, downplaying the recent reports about the ECB Considering new stimulus packages.
“EZ Growth Disappointing But Inflation Not A weak Q3 leaves the ECB likely, once again, to have to downgrade its expectation for 2018 GDP growth. However, with the unemployment rate continuing to come down this year and core inflation still tracking their (admittedly low) projection, this could simply be a sign that policymakers overestimated the potential growth rate of the region.
If that is the case, and if core inflation looks to head up towards their 2019 projection of 1.5%, then the ECB should be able to continue dialing back stimulus which would support the euro,” CIBC argues.
“Talk of a return by the ECB to even more stimulus doesn’t add up in our view,” CIBC concludes.