Economists say that a complete exit from the crisis will take longer than expected because policy isn’t easy enough.
In the client note they also says that the rate may be 250bps too high as the equilibrium neutral policy rate is probably lower now vs last cycle.
They growth as “lacklustre” and inflation well below the ECB target due to the ECB’s tight monetary stance “as far as the eye can see” and a reluctance to engage in it’s own QE.
They expect political and social stress of fiscal adjustment to be the catalyst for any “second act” of the crisis.
Are you listening Mr Draghi?