S&P: Issues report saying ECB responds to threat of a triple dip
- While the TLTROs are likely to have a relatively positive effect on credit conditions in the periphery, their net effect on the ECB's balance sheet will be very modest at first. Furthermore, estimates put the buying capacity of the ABSPP at less than EUR10 billion a month, which suggests that the impact on the central bank's balance sheet will also be slow to materialise.
- This is why we believe that the ECB's recent decisions increase the probability that it will eventually launch a full-fledged quantitative easing program of private sector bond purchases to obtain a meaningful and relatively swift impact on its balance sheet.
- In our view, the vulnerability of the recovery in the eurozone, the elevated risks of a triple dip, and the threat of negative inflation would justify the recourse to additional non-conventional measures.