European Central Bank (ECB) policies GTM –UK | 22 ECB balance sheet: Assets* Trade-weighted euro and EUR/USD EUR trillions Index level (LHS); price of euro in dollars (RHS) 5.0 ECB Dec2016 forecasts y 4.5 2017 2018 2019 4.0 CPIinflation** 1.3 1.5 1.9 3.5 Aug2012 – EUR/USD 3.0 Sep 2014: Global econom Jan 2005 – -35% 2.5 Jul 2012: 249% 2.0 1.5 1.0 0.5 Trade-weighted euro 0.0 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Source: (Left) ECB, FactSet, J.P. Morgan Asset Management. *Balance sheet forecast does not include Targeted Longer Term Refinancing Operations (TLTRO). Expansion in balance sheet still to come assumes EUR 80bn per month expansion between now and March 2017 and EUR 60bn per month expansion between April 2017 and December 2017. **Inflation is Q4 to Q4 for each year. (Right) FactSet, J.P. Morgan Asset Management. Guide to the Markets - UK. Data as of 31 December 2016. 22