ECB’s 600 Billion-Euro Stimulus Hasn’t Stopped Calls for More

(Bloomberg) -- Barely had the European Central Bank unveiled its latest stimulus boost to help the euro-area economy through its worst crisis in decades, than economists and strategists were already clamoring for more.

The 600-billion euro ($680 billion) increase in the ECB’s emergency bond-buying program -- taking it to 1.35 trillion euros in addition to a swathe of other measures -- won’t be enough to mop up government funding needs this year and next, according to ABN Amro economist Nick Kounis.

Banque Pictet & Cie’s Frederik Ducrozet expects the ECB to add another 500 billion euros to its firepower in September, and JPMorgan Chase & Co.’s Greg Fuzesi is reckoning with 750 billion euros in the fourth quarter.

ECB President Christine Lagarde said after Thursday’s announcement that officials are determined to ensure the euro area has sufficient monetary support. With the economy on track for a nearly 9% contraction this year, she said it’s crucial for governments and monetary authorities to work together to restore economic conditions.

She also said a key part of the bond-buying program is restoring inflation to the goal of just-under 2%. The latest scenarios foresee price growth at just 1.3% in 2022.

”The market will want more if there is no realistic prospect of the inflation target being reached,” said Peter Chatwell, head of European rates strategy at Mizuho International PLC. “Having the inflation forecast for 2022 clearly below target does imply ‘more to come.’”

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