The ECB’s bond-buying extension | Mackenzie Investments

The ECB’s bond-buying extension

On December 8, Todd Mattina, Chief Economist and Strategist on the Mackenzie Asset Allocation Team, appeared on BNN to discuss the European Central Bank’s (ECB) decision to extend its bond-buying program to December 2017 and cut monthly bond purchases. He also discussed the impact of President-elect Donald Trump on the Canadian and U.S. economies.

Key Points

  • Continued monetary stimulus is appropriate, but the ECB’s reduction was surprising given under lying weakness.
  • The Eurozone is still growing faster than its long-run trend, which will keep it on course to eliminate its output gap over the coming years.
  • Three things that will stand out in the first two years of Trump’s presidency are: the design of tax cuts and infrastructure programs; the impact of fiscal stimulus on the Fed and deregulation.