While we think Brexit uncertainty is mainly an issue for the UK economy, there is also bound to be some knock-on impact on the eurozone. With post-Brexit evidence still patchy, we think the ECB will wait until the September meeting before extending its QE timetable.
Inflation remains far below the ECB’s target of 2% and while headline inflation will rise later in the year, thanks to the fading impact of a lower oil price, underlying inflationary pressures still remain very low. Delaying until September will allow an assessment of any Brexit impact to be outlined in the new ECB staff forecasts.
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