European QE may be less successful than in the US - BAM

FXStreet (Barcelona) - Marino Valensise, Head of Asset Allocation and Chairman of the Strategic Policy Group at Baring Asset Management sees the European quantitative easing to be less successful than the US with respect to economic growth because of low bond yields.

Key Quotes

“In Europe, however, the plan to revive growth has not been powerful enough and the prolonged agony of many lending institutions leaves businesses starved for funding. In a world in which economic activity is slowing, European exporters are now suffering, and this is becoming apparent in Germany.”

“If Germany suffers enough, the intellectual debate on quantitative easing might be resolved positively, as political support for more aggressive European Central Bank action will grow: quantitative easing, also through a weaker euro currency, may come to the rescue.”

“However, we feel with bond yields already at a low level, European quantitative easing may be less successful than in the US in fostering economic growth. And, in the short term, it may also require a worsening in German economic conditions for the necessary political consensus to be achieved. All this weighs on our view for both economic growth and corporate earnings on the continent.”