The European Central Bank left policy unchanged this week which was widely expected. The deposit rate remained at -0.50% and QE at E20B per month. What struck us was the ECB’s announcement that the central bank would conduct its first strategic review of policy since 2003. The review will address a range of relevant topics but will center on inflation. Despite aggressive stimulus for many years, the ECB has failed to lift inflation to its inflation target just below 2%. Some analysts have cynically suggested that it was not a failure of monetary policy, but rather measurement error and that inflation is running hotter than indicated. Lower than expected inflation, as predicted by classic econometric models such as the Phillips Curve, is not unique to Europe. Inflation is running stubbornly below the Federal Reserve’s desired level as measured by the core PCE index.
A Peapack Private Wealth Management publication: INVESTMENT Outlook fourth quarter 2019
onto shareholders. Animal spirits joined with the Christmas spirit, as trade tensions lessened, global central banks
affirmed their accommodative ways, and economies around the world showed nascent signs of bottoming and
possibly turning up.
returns hovering around 10% for the three-month period. Bond and real estate equity returns were essentially flat
for the quarter, while commodities finally showed some life, up 5%.