Andreas Utermann outlined his belief that the European Central Bank may have to expand its existing drip-feed policy into full-blown QE as a result of the current measures failing to accelerate economic growth.
“Rather than equities being positively impacted by QE, it has had a negative impact,” he said. “There is not much ammo left in the ECB’s QE policy.
“Early QE in the UK and US has led to healthier economies than Europe and Japan. I am more concerned about the medium-term viability of the eurozone than I was five years ago,” he added.
Utermann believes that there is too much focus on sovereign debt levels in the eurozone, but voiced his approval of the ECB’s approach.
“Markets have called the ECB’s bluff and now the ECB has called the markets’ bluff,” he said. “The only thing stopping a recession is the ECB’s aggressive attempts to stave off deflation.”
However, he cited the timeframe of the euro’s drop from 1.3 to 0.77 against the pound as an indication that it could bounce back in the medium-term.
"What Europe really needs is a weaker euro,” he said. “The euro going back to 1.0 is within the realms of possibility.”
Utermann also said that he expects the Bank of Japan will to accelerate its QE programme going into 2015, and added that Yen depreciation could go 'much further than markets anticipate'.
