© Soeren Hettler
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Currently, we do not expect any further measures by the ECB. The monetary policy stance is very accommodative, and it will be so at least until the end of this year.
The risks for this view are on the downside. Recent inflation rates have underlined this once again. Thus, we cannot completely exclude that further steps will be done on the expansive side.
Do you think the ECB's current monetary policy will help to spur inflation to its target rate in 2016? Or will it not be sufficient?
The ECB's current policy will not be able to push inflation rates in the area of the 2% target, this is absolutely obvious. The low and still decreasing oil price is a heavy burden, although it is a factor which is not in the hands of monetary policy.
However, there are some indications for a positive influence of the asset purchase program, for example if we look at credit growth in the Euro area. The negative trend observed between 2012 and mid-2015 seem to be over and we are now stabilizing on the positive side, at least.
With Germany being the main driver of the Eurozone, do you see it changing in 2016? Will other economies also start growing more rapidly to contribute to Euro zone's growth?
Certainly, Germany is the biggest economy and in our view GDP growth will stay around the benign level of 2015. However, Spain and especially Ireland should outperform Germany, once again. Summing up, the big picture we had last year should not change decisively in 2016.
More analysts all over the world expect the Euro to fall lower and eventually reach parity with the Greenback anytime in 2016. Do you share this view?
According to many analysts worldwide, parity is only a question of time. We share the view that at current levels the Euro has some room to depreciate. For the whole year 2016, we expect a trading range between 1.00 and 1.10 against the US Dollar. Although we do not completely rule out exchange rates below parity for the months to come, these levels should not be sustainable, especially as long as the ECB does not decide to take additional and major expansionary steps.
What are your forecasts for EUR/JPY and EUR/GBP by the end of the Q1 of 2016 and for a longer-term?
The Yen was able to appreciate across the board in the last weeks. This strength depends heavily on the situation in China as well as some geopolitical risks. Thus, as the global uncertainty should diminish in the next months, there is some upward potential for the EUR/JPY in the short term. Afterwards, the currency pair should move more or less sideways in the area of 130 in 2016, in our view.
Against the British Pound the Euro should lose ground in 2016. The cross will finish the year at around 0.71, in our view. Thus, given the current level of 0.76, the single currency should depreciate more than 5% in the next 12 months.