One of Switzerland’s more prominent banks has given a broad seal of approval – with some caveats – to the decision last week by the European Central Bank to further boost the eurozone by further measures to boost bank lending.

One of Switzerland’s more prominent banks has given a broad seal of approval – with some caveats – to the decision last week by the European Central Bank to further boost the eurozone by further measures to boost bank lending.

Due to speak as a panellist at the 17 June WealthBriefing Summit London, Robert Jones, who is co-head of European equities at Union Bancaire Privée, said the ECB has gone further than before in trying to revive the economy.

“Did [ECB president Mario] Draghi serve us the similar treat he did in the summer of 2012? Not quite but he delivered more than the ECB had suggested before. Taken together, the innovative and comprehensive bundle of measures should support the economic recovery over time,” Jones said.

“Leading indicators already projected somewhat firmer growth based on rebounding domestic demand, inflation is bottoming out and unemployment has started to fall. The ECB actions serve to bolster this outlook and to further contain the risks,” he continued.

Last Thursday, the ECB made the following moves: Its main refinancing rate was cut to a new record low 0.15 per cent from 0.25 per cent; the deposit rate was cut to a negative -0.10 per cent from zero; the marginal lending rate was cut to 0.4 per cent from 0.75 per cent. A round of quantitative easing valued at €164.5 billion ($223.6 billion) was created by a halt to the sterilisation of previous bond purchases. The central bank also made further moves to support bank lending.

“In conclusion, the ECB acted strongly to reduce the risk of deflation and to prevent inflation expectations from adjusting downwards towards the current low level of headline inflation,” Jones said, adding: “We find it interesting to see the ECB doing at least as much as expected to stimulate but at the same time upping its 2015 GDP forecast from 1.5 to 1.7 per cent (above consensus). Overall these measure will be helpful for the domestic recovery story.”

Coutts, the UK private bank, said the ECB had “finally delivered on its promised stimulus with a bevy of interest rate cuts, targeted long-term lending and a nod to quantitative easing (QE, or bond buying)”. Coutts said it expects “full-blown QE later this year, but think that speculation of a euro plunge is unfounded”.

The bank said most of the ECB measures were expected, but “this shouldn’t detract from how far the ECB has come since the austerity days of former president Jean-Claude Trichet and Bundesbank objections to almost any form of cross-border assistance”.

The ECB’s shift in policy is significant, according to Luca Paolini, chief strategist at Pictet Asset Management.

“The ECB is now acting on pledges it made some time ago. In one sense, the shift in stance is an attempt by the ECB to ditch its reputation for being ‘behind the curve’,” Paolini said in a note.

He said that in terms of asset allocation, the ECB move would, in isolation, encourage Pictet Asset Management to take a more bullish stance on equities. “Yet with our readings on investor sentiment suggesting positioning has become overly-bullish, we are reluctant to move from neutral to overweight equity for the time being. We do, however, retain a preference for cyclical sectors,” he said.

“We also keep our underweight stance on European stocks – valuations are already at expensive levels and the asset class is trading at a premium to its global counterparts. Within fixed income, we are most positive on credit, especially high-yield bonds as well as emerging market hard currency debt,” he added.

Sandra Crowl, member of the investment committee at Carmignac Gestion, said of the move: “The full combination is a convincing package that has every potential to give some oxygen to the Eurozone economy. It is designed to achieve the objective of improving the transmission of monetary to the real economy, with a credit growth recovery and a lower Euro as potential outcomes.”

“By announcing that this action is not finished yet, Mario Draghi keeps the door open to further non-conventional measures in order to deliver on the ECB objective of inflation below but close to 2 per cent,” she added.