The 5y5y forward inflation rate is at an all-time low and clearly below where it was when Mario Draghi first hinted at quantitative easing (QE) in 2014. The ECB has already done some more easing and President Draghi himself mentioned that there was an interesting discussion at the latest Governing Council meeting on different tools to do some more easing – the asset purchase programme (APP) and others. What do you need to see in order to decide to do more? What we need to see is a de-anchoring of inflation expectations. This has not yet happened, despite the fact that there has been a drop in market-based inflation ... (full story)

Longer-term inflation expectations in the euro zone need to come unstuck for the European Central Bank to provide more stimulus, ECB Vice President Luis de Guindos was quoted on Saturday as saying. With growth slowing and inflation staying well below the ECB’s target, the bank recently raised the prospect of even more stimulus, arguing that a rate cut or even more asset purchases may become necessary. “What we need to see is a de-anchoring of inflation expectations,” de Guindos told Italian newspaper Corriere della Sera when asked what the bank needed to see to provide more stimulus. “This has not yet happened, ... (full story)