By David Zahn, CFA, Head of European Fixed Income, Franklin Templeton Fixed Income
As Europe’s economy continues to recover from COVID-19, it appears the central bank will remain accommodative, but for how long? Our Head of
European Fixed Income Finds Central Bank Support
Summary
- Since the beginning of the year, the ECB has stepped up the pace of its bond buying to around €80 billion per month over the past quarter and said it would continue to buy at an accelerated rate as conditions warrant.
- Inflation is more of an issue in the United States than in Europe.
- Upcoming elections in Europe: German election in September and French election in the next year.
- The United Kingdom is bouncing back even more quickly from COVID-19 than mainland Europe. There are lingering trade issues tied to Brexit.
- Given rising growth and inflation trends globally, it would be hard to justify continued central bank accommodation at such high levels.
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