What does the ECB have to do? - Forex News by FX Leaders

What does the ECB have to do?

Posted Tuesday, August 23, 2016 by
Skerdian Meta • 1 min read

The ECB (European Central Bank) has done a lot in the last two years to revive the economy of the Eurozone. We, forex traders are always sceptical and never get satisfied, so coming from a forex market analyst, when we refer to a central bank, a lot means more than a lot. In fact, the ECB threw the kitchen sink at it early this year when they increased and extended the monetary easing as well as cutting the interest rates further.

The forex market took that as a good sign. According to the market, the extension of the QE (quantitative easing) programme would regenerate the Eurozone economy, or better I say Eurozone economies. All the different EU countries have their own specifics and although their economies are closely tied to one another there are still huge differences, so one monetary policy does not fit all.

Months are going by since the extension and we´re not seeing a big impact on the real EU economy as a whole. The German, French and the EU services and the manufacturing sectors numbers for August were released a while ago and they didn´t show a great improvement or even any change at all. The French manufacturing remains in contraction and the EU manufacturing is just about flat. The ECB can increase the QE programme further but there´s not much more it can do because there is only a limited number of assets to buy. If they want it to work, coordination with fiscal policy is needed, but with so many governments … Let´s just hope it all sorts itself out.

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About the author

Skerdian Meta // Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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