We permit the publication of our auditors’ report, provided the report is published in full only and is accompanied by the full financial statements to which our auditors’ report relates, and is only published on an access-controlled page on your website, to enable users to verify that an auditors’ report by independent accountants has been commissioned by the directors and issued. Such permission to publish is given by us without accepting or assuming any responsibility or liability to any third party users save where we have agreed terms with them in writing.

Our consent is given on condition that before any third party accesses our auditors’ report via the webpage they first document their agreement to the following terms of access to our report via a click-through webpage with an 'I accept' button. The terms to be included on your website are as follows:

I accept and agree for and on behalf of myself and the Trust I represent (each a "recipient") that:

  1. PricewaterhouseCoopers LLP (“PwC”) accepts no liability (including liability for negligence) to each recipient in relation to PwC’s report. The report is provided to each recipient for information purposes only. If a recipient relies on PwC’s report, it does so entirely at its own risk;
  2. No recipient will bring a claim against PwC which relates to the access to the report by a recipient;
  3. Neither PwC’s report, nor information obtained from it, may be made available to anyone else without PwC’s prior written consent, except where required by law or regulation; and
  4. PwC’s report was prepared with Hermes Property Unit Trust's interests in mind. It was not prepared with any recipient's interests in mind or for its use. PwC’s report is not a substitute for any enquiries that a recipient should make. The financial statements are as at 25 March 2017, and thus PwC’s auditors’ report is based on historical information. Any projection of such information or PwC’s opinion thereon to future periods is subject to the risk that changes may occur after the reports are issued and the description of controls may no longer accurately portray the system of internal control. For these reasons, such projection of information to future periods would be inappropriate.
  5. PwC will be entitled to the benefit of and to enforce these terms.
I accept

1. Select your country

  • United Kingdom
  • Austria
  • Australia
  • Belgium
  • Denmark
  • Finland
  • France
  • Germany
  • Iceland
  • Ireland
  • Italy
  • Luxembourg
  • Netherlands
  • Norway
  • Singapore
  • Spain
  • Sweden
  • Switzerland
  • USA
  • Other

2. Select your investor type

  • Financial Advisor
  • Discretionary Investment Manager
  • Wealth Manager
  • Family Office
  • Institutional Investor
  • Investment Consultant
  • Charity, Foundation & Endowment Investor
  • Retail Investor
  • Press
  • None of the above

3. Accept our terms and conditions

By clicking Proceed I confirm I have read the important information and agree to the terms of use.


The Hermes Investment Management website uses cookies to remember your preferences and help us improve the site.
By proceeding, you agree to cookies being placed on your computer.
Read our privacy and cookie policy.

Reaction to today’s ECB rate and QE changes...

Home / Press Centre / Reaction to today’s ECB rate and QE changes…

03 December 2015
Macro Economics

Neil Williams, Group Chief Economist

Welcome to ‘divergence December’. The fact that euro-zone and US monetary policy will be taking different routes – the ECB loosening, the Fed tightening – was always a given. So, what markets needed today was guidance on how fast they’ll be travelling and how far they’ll end up going.

The first leg of that – today’s ECB decision – was probably the world’s worst kept secret. Euro-zone GDP may be back up to its pre-crisis level, but with 2% headline inflation only a remote possibility and only half the EUR 1.1trn ‘QE1’ programme completed, Mr Draghi was always going to act.

In the event, though, he has under-delivered.


Not quite pushing out the ‘boat on QE2’...

First, he hasn’t quite pushed out the ‘boat on QE2’! By extending it six months to March 2017, and including regional and local debt, his sign of intent is he will do more. But, by not upping the pace, at just EUR 60bn purchases per month, and excluding other assets such as more corporate bonds and mortgage debt, he is keeping some powder dry.

Second, to get ‘bang for his buck’, he rightly shaved the deposit rate further into negative territory. But, the only -10bp cut, to -0.3%, is puny. Aimed at discouraging cash hoarding, even more negative rates will likely be needed if the liquidity QE throws up is to be pushed out to where it matters most – consumers and businesses.

A problem with QE is it provides cash to lend, but cannot force consumers and firms to borrow. As the ECB’s own bank lending survey reveals, credit supply, at a five-year high, is not being matched by credit demand, which continues to cool.

Marrying these two changes, the effectiveness of negative rates will be in keeping bond yields down – given the ECB’s pledge to buy government bonds down to a yield that’s as low as the negative deposit rate.

Either way, while helpful in addressing the symptom, deflation, Mr Draghi cannot be expected to solve the problem – a monetary union devoid of economic union. This will take years.

So, we now await the second leg – the first US rate hike – likely on 16 December. After FOMC prevarication and what will be thinning holiday markets, the Fed will use many signposts to flag it up, including Janet Yellen’s testimony, the coming jobs data and a whole line of Fed speakers.

So, I suspect that by the time we get confirmation on the 15 December that US inflation is finally beginning to lift, the ‘writing’ of the Fed’s first rate hike for almost a decade will have long been ‘on the wall’.

Share this post:

Find posts by author

  • Alex Knox, ACA
  • Andrew Jackson
  • Andrew Parry
  • Claire Gavini
  • Dr Michael Viehs
  • Emeric Chenebaux
  • Eoin Murray
  • Geoffrey Wan, CFA
  • Harriet Steel
  • Ingrid Holmes
  • Jonathan Pines, CFA
  • Louise Dudley
  • Mark Sherlock, CFA
  • Martin Todd
  • Michael Russell, CFA
  • Michael Vaughan
  • Neil Williams
  • Nick Spooner
  • Nina Röhrbein
  • Philip Nell
  • Saker Nusseibeh
  • Silvia Dall’Angelo
  • Tatiana Bosteels
  • Tim Crockford
  • Tommaso Mancuso

Find posts by category

  • macro economics

Press contacts