Goldman Sachs’ economists think only partial details of a quantitative easing programme of up to €1 trillion will be revealed by ECB president Mario Draghi today, due to delays over risk sharing among member states.
However, both Goldman and Bank of America (BoA) economists think risk sharing will initially be mutualised by countries within the bloc, despite its controversy.
On its form, BoA does not think the ECB will add corporate bonds, in contrast to Morgan Stanley’s economists who believe Draghi may add €100bn of private sector bonds to €500bn of sovereign paper. Deutsche Bank also thinks investment grade corporate bonds will be included in Draghi’s plan.
And economists are divided on its impact.
Morgan Stanley’s number crunchers “remain sceptical on the impact of sovereign QE”, while Citi’s economists also take a dim view. “We doubt that the first iteration of the QE programme will be successful enough...” they wrote. Barclays’ economists remain confident. “Will QE work? We think it could,” they said.