DBRS Commentary: Benefits of ECB Quantitative Easing both Real and Symbolic

DBRS, Inc. (DBRS) has today released a commentary entitled “Benefits of ECB Quantitative Easing both Real and Symbolic.” The commentary argues that prospects for the introduction of quantitative easing have increased.

• Amid low inflation and economic weakness in the Eurozone, signals from the European Central Bank suggest that prospects for the introduction of quantitative easing have increased.

• The impact of QE however is difficult to assess with any confidence. In the US and UK, QE succeeded in lowering real interest rates and bolstering confidence, but had a limited direct effect on the recovery. In the Eurozone, QE could have a similar impact, and alone would be unlikely to solve the problem of chronic weak demand.

• Nevertheless, following the huge decline in output and the continued slack in the economy, the case for QE is strong. QE would also provide a strong signal that the Eurozone is willing to further act on behalf of all member states.

The applicable methodology is Rating Sovereign Governments, which can be found on our website under Methodologies.

A copy of this commentary is available by clicking on the link below or by contacting us at info@dbrs.com.