Draghi drag

On Thursday, the European Central Bank lowered inflation and growth forecasts up to 2017. Bloomberg has three articles but in none of them, it mentions the growth forecast downgrade in numbers. Wonder why. Only, the downgrade to the inflation forecasts is mentioned and quantified. FT has the growth downgrade in numbers.

Inflation forecasts for this year were revised downwards to 0.1 per cent, from the 0.3 per cent estimate in June, 1.1 per cent next year from 1.5 per cent, and 1.7 per cent in 2017 from 1.8 per cent. The central bank targets inflation of just below 2 per cent.

Growth forecasts were revised down to 1.4 per cent this year, from 1.5 per cent, 1.7 per cent in 2016 from 1.9 per cent and 1.8 per cent in 2017 from 2 per cent. [Link]

So, after more than a year of QE, this is what the ECB has to show. What does he do? He promises to buy more of the bonds and keep the QE programme longer than Sept. 2016, if necessary. Stock markets in Europe jump, the Euro declines and gold fails to rally. That proves the point that gold is the anti-dollar and not yet an anti-fiat money alternative. It is a matter of time (could be long) before it makes that transition.

Nonetheless, bizarre policies and bizarre market responses. Both seem made for each other.


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