Dear Readers,

The European Central Bank has given concrete form to its medium-term policy guideline. It will continue its bond purchase program until September 2018, but will reduce the monthly purchase volume from currently 60 to 30 billion.

However, the Lerbach Round does not see this as a fundamental turnaround in monetary policy. Instead, it interprets the ECB's plan as a signal that monetary policy will remain very loose.

Consistently 73 percent of the experts assess the outlined path as positive for the equity market in the medium term. Above all, the experts praise the good expectation management and the cautious approach of the central bankers. In view of the continued low level of interest rates, the portfolio shifts towards shares would continue. The extension of the share boom is likely, also supported by the positive earnings development of the companies.

The minority points to the danger of a bubble forming on the stock markets with correspondingly negative medium-term consequences. The currently very positive economic development could at any time be discharged into price pressure. The ECB would then face this much too late,

In the bond market, the professionals expect a sideways or slightly upward trend in the coming months. As long as inflation is under control, there are no major price risks. In the further course of 2018, however, increased price fluctuations are to be expected. The "fat" end, experts say, will come later on the bond market.

However, the ECB will now find it increasingly difficult to justify its extremely expansive monetary policy. Somewhat more than half of the experts now consider the actions of the central banks to be too cautious and criticise that they are no longer commensurate with the economic situation in Europe. The proponents of the ECB's policy point out that the protection of the weak economies in Europe continues to be necessary in order to hold the EURO structure together.

Sincerely,

yours

Klaus Meitinger & the expert team of the Lerbacher round