According to the latest Reuters poll, a majority of economists believe that the new European Central Bank (ECB) President Lagarde will follow policies adopted by former President Draghi.
However, they opine that the quantitative easing (QE) program will do little to revive Eurozone’s dwindling economic growth prospects.
“Forward-looking indicators suggest a slowdown in the eurozone, but the chances of a recession over the coming year fell to 25% from 30% in the last poll. For the coming two years, it was down to 30% from 35%.
Despite monetary stimulus, eurozone inflation languishes at less than half the ECB’s target of just below 2%. The Nov. 11-14 poll suggested it would not be anywhere near that until at least July 2021.
Inflation was predicted to average 1.2% next year, unchanged from October’s survey. The median forecast for 2021 was 1.4%, the lowest since polling started for this period in January.
The eurozone economy expanded 0.2% last quarter and the regular poll of over 80 economists predicted GDP growth would average 0.2% to 0.3% per quarter from now to mid-2021, largely unchanged from the last poll.
When asked if Lagarde would be successful in helping facilitate a “synchronized fiscal response” to the slowdown over the coming year, 60% of 43 economists said no.
Despite expectations for lacklustre growth over coming quarters, the timing of the ECB’s next deposit rate cut, to -0.6% from -0.5%, was moved to the second quarter of next year from the first quarter predicted a month ago.”
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