Quotes from Societe Generale:
- Draghi claimed that the ECB's decisions have already had significant positive effects and that the transmission of its actions will strengthen in an environment of improving consumer and business sentiment. While the timing has been favourable for the ECB, we are still concerned that the positive effects will be limited due to deleveraging and increased regulation in the banking sector, and we take note of the relatively small improvement in inflation expectations so far.
- As the last Dec forecasts did not fully include the fall in oil prices, the new inflation forecast for 2015 has been revised down from 0.7% to 0%. In 2016, however, headline inflation has been revised up to 1.5% (from 1.3%) and the new forecast for 2017 is 1.8%, close to the target. For core inflation, the forecast is unchanged at 0.8% in 2015, 1.3% in 2016 and 1.7% in 2017, 0.3pp and 0.4pp higher, respectively. For growth, the forecast has been revised up by 0.5pp this year and 0.4pp in 2016, to 1.5% and 1.9%, respectively, while the forecast for 2017 is 2.1%.
- While the ECB sees much of this improvement as a result of its own measures, the oil price decline is also supportive (the QE impact is included in the forecast and points to a small impact of around 0.2-0.3pp on inflation).
