Cross Asset Investment Strategy: Fed & ECB - Towards a reduction in monetary accommodation

The improvement of global economic conditions will allow the Fed and the ECB to reduce the degree of monetary accommodation, each with its own scale: continuation of the fed funds rate hike cycle for the Fed and reduction of asset purchases for the ECB. 

True, underlying inflation measures remain weak on both sides of the Atlantic but the evolution – even timid – of wages and the dissipation of temporary factors should reassure the two central banks : inflation will return to their targets.

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