Follow Joshua McCallum
Joshua McCallum is the senior Fixed Income Economist at UBS Global Asset Management, where he provides economic analysis to support and challenge portfolio managers. Before joining UBS in 2005, Joshua worked for the UK Treasury, dealing with an eclectic range of topics including international macroeconomics, the UK budget, economic reform in Europe, and post-conflict fiscal policy in Iraq.
Last week, the ECB crossed a Rubicon by announcing a quantitative easing programme. With the results of yesterday's Greek election, Greece is also standing on the edge of a point of no return. The main uncertainty is how the new Syriza coalition government will deal with the negotiation of the current bail-out programme due to expire at the end of February.
The ECB is widely expected to announce some sort of QE programme on Thursday, but the details are by no means certain. The main questions will be the size, speed and start date of the programme, as well as the tricky question of what assets the ECB will buy – we provide a scorecard of potential options and how much of a surprise or disappointment each could be. Last week the SNB decided to end its EURCHF exchange rate floor. This was probably due to fears that it would be too expensive to defend the floor following ECB QE.
In every year since 2011, the consensus forecast for US interest rates has been drastically wrong. The main culprits for this are likely to be either disappointments in the data (growth, inflation), longer-term expectations or technical factors. There is little evidence that the drop in the oil price reflects weaker global demand.
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