FXStreet (Guatemala) - Kit Juckes, Global Head of Currency Strategy at Societe Generale takes into account the global growth peaks in relation to the ECB’s actions.
"G2 inflation is a relevant concept in a world where global labour and goods supply matter and the output gap is as much a global as a national concept. European inflation is lower because growth has been slower, unemployment higher and the currency stronger than in the US, but the G2 currency isn't very volatile and as chart 1 shows, the last time we saw a cyclical peak in G2 inflation up at 3.2%, it followed a G2 GDP peak growth rate of nearly 5%, since when successive peaks have been 3.4% and 2.7%. G2 growth is picking up after the winter pause and inflation too, has stopped falling (I am told by those who know)."
"But there's a big risk that the downtrend in growth peaks, and in inflation peaks, is set to continue. Even IF the ECB can get the Euro to fall with their much-anticipated policy action this week, I struggle to see how negative deposit rates, ABS purchases, SMP sterilisation, or even outright QE, would do much to boost lending. So the ECB is really just hoping that the US economic recovery will gather momentum, and drag both