Euro area higher real rates, unwarranted tightening of monetary policy

Real interest rates in Euro area are increasing as the lower inflation expectations dominate the downtrend in nominal yields. 

"The ECB is likely to see this as an unwarranted tightening of the monetary policy and this is one of the factors that could lead to further monetary policy easing. However, again, the decline in inflation expectations is likely to be seen in light of the lower oil price, implying the ECB will stick to a dovish stance and not yet signal imminent easing", states Danske Bank in a report to its clint.