According to experts, Mario Draghi’s resignation as president of the ECB will not change the eurozone economy. His successor Christine Lagarde is expected to follow Draghi’s path. Most economists agree that Christine Lagarde will continue Draghi's loose monetary policy. However, the weak economy of the eurozone will not benefit from the asset purchase initiated by the ECB. Looking back, during the presidency of Mario Draghi, the European regulator decided to buy bonds and cut interest rates deeper. According to experts, this step has been taken in order to lower interest rates even further. The program of quantitative easing (QE) initiated by Draghi will not be able to support economic growth. The good news is that the recession forecast for 2020 shrunk to 25% from the previous 30%. The bad news is that the eurozone inflation remained low, twice below the 2% target. Even the ECB's monetary stimuli have not contributed to the growth. Experts believe that inflation will hit its target by July 2021. Next year, inflation is forecasted to be within 1.2%. In 2021, the score will be at 1.4%. It is the lowest rate for the past two years. A strategy is an important matter for the eurozone economy. Supposedly, Christine Lagarde will continue following Mario Draghi’s economic policy of quantitative easing. The majority of experts agree that the new head of the European regulator will not be able to synchronize budgetary policy in order to resist the economic slowdown in the coming year. Amid the growth slowdown in the euro area, the ECB has shifted the expected time frame of the next interest rate cuts to the second quarter of 2020 from the first quarter, economists say. The interest rate is expected to be reduced to minus 0.6% from minus 0.5%. As for the refinancing rate, the ECB is planning to keep it at the same level until the end of 2021.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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