While the programme has been ‘hugely useful’ for the eurozone in one sense, it cannot yet be judged a success said Joshua McCallum, head of fixed income economics.
The pushing down of the value of the euro has served to boost external competitiveness, but it is yet to hit domestic demand.
McCallum also noted that while banks so far seem more willing to lend and at a cheaper cost, lending to the private sector has remained very weak.
While stronger export numbers for eurozone companies could in theory mean higher demand for labour which increases wages and confidence, that has not materialised.
He said the ‘leaky bucket’ of the eurozone banking sector is getting in the way of the QE programme feeding through into local demand.
A combination of stricter capital requirements and high levels of non-performing existing loans means banks are still reluctant to provide the lending businesses need to invest in labour and equipment, McCallum explained.
McCallum did note however that it is still ‘early days’ in the life of the QE effort and the ultimate success will be judged on whether this demand is kick-started in the coming months or not.
