Since our last Investor’s Summit in mid-2014, the path of growth across global economies diverged substantially, as we anticipated. After a bumpy start to 2014, the US has been recovering smartly while Europe, Japan and much of EM, including China, have ground slower. Europe in particular has been flirting with deflation and we have revised down our outlook for growth and inflation for the eurozone. In mid-20141, we concluded that we expected continued monetary easing by the European Central Bank (ECB) into 2015, including the implementation of some form of quantitative easing (QE). The ECB eventually followed through, announcing QE in late January that surprised markets to the upside with its scope and size. Through this action, the ECB demonstrated its intention to do what it can to meet its inflation target. We believe QE has both a financial market impact and a real economy impact. The financial market impact will come first as the markets respond to the central bank announcement and action. The impact on the real economy will come with time as the economy responds to the monetary policy changes. The ultimate impact on the economy from ECB QE is unclear. We expect the greatest immediate impact to be on the euro, which we expect to weaken in response.
Source : Invesco Real Estate