standards have led to renewed discussion of a possible credit crunch.
– However, recent signs of a bottoming-out of growth indicators and the ECB’s unprecedented unconventional measures will significantly reduce the risk of a credit crunch. We therefore stick to our view that the credit weakening over the course of 2012 will remain manageable. Although retaining its easing bias, Draghi’s tone should be slightly more
constructive, supporting our expectation of no further rate cuts in 2012.
The BoE is expected to restock its QE measures by GBP 50bn next Thursday. In his piece, Mauro Marrano identifies the MPC’s continuing concerns about the growth outlook as the main rationale behind this – despite recent improvements in business surveys and market sentiment. In addition, falling inflation leaves scope for further asset purchases.
– Price levels are even falling in Switzerland. While being primarily driven by the preceding strong CHF appreciation, the price declines are temporary and therefore not the beginning of a deflationary spiral. Accordingly, Alexander Koch does not expect falling prices to be a harbinger of further SNB policy action.
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