Gilles Moëc (AXA Group) | We knew that the European Central Bank (ECB) was very divided in the run-up to the Governing Council meeting on September 12th, but two weeks later the fallout of what must have been a very fractious discussion is still very much here.
Christine Lagarde, the nominee to be the European Central Bank’s next president, vows for the issuance of financial instruments that group bonds from different EU members which could act as refuge assets and increase the supply of bonds with high credit quality in the EMU.
Christian Gattiker, Head of Research, Julius Baer │It is about time: central bankers present their take on the current mess at the Jackson Hole meeting, the prime plat-form for this. The more concerned they are the better. We think concerted central bank action will still avoid a global recession. Warming up to fiscal easing, as in Germany, is the icing on the cake.
Renta 4 | The September meetings of the Federal Reserve and ECB will be key in economic and market developments in the Autumn. The market discounts with 58% probability an ECB cut in the deposit rate to -0.6%.
Renta 4 | Olli Rehn, President of the Finnish central bank and member of the ECB board has said that the ECB is preparing a monetary stimulus package which should exceed market expectations and allow it to take on the slowdown confronting the Eurozone.
Shaun Riordan │Many of us are already enjoying our summer holidays. Others are packing now, looking forward to relaxing on the beach, or in the mountains. Wherever we are taking our holidays we should make the most of them. A perfect storm is brewing which could hit Europe hard in the autumn, with devasting economic and political consequences.
Market concerns persist, and there seems nothing in the short term that will change this. In fact, the latest ECB Financial Stability Report gave evidence of the nest of problems and risks in which we have found ourselves for some time, while recalling the downside balance of current risks, analysts at Intermoney point out.
Axel Botte (Ostrum AM) | Equity markets resumed rising last week. European indices gained as much as 2.5%. The rebound in bank stocks appears traceable to Mario Draghi’s comments hinting at possible changes to the deposit facility rate scheme. Equity markets were also upbeat in Asia and in North America.
Intermoney | The president of the ECB opened the door to further stimulus if the economic and inflation perspectives in the Eurozone remain low, in the shadow of a scenario dominated by downside risks for activity. In fact, he recalled that “there is no lack of instruments” to fulfill his mandate, at the same time as he is contemplating new delays in raising interest rates. Textually he said: “we are assured that monetary policy continues to accompany the economy, adjusting our orientation on interest rates to reflect the new inflation perspectives”.
The ECB changed their forward guidance in yesterday’s meeting, signaling the hold in rates “at least to the end of 2019” along with a new round of TLTROs, in order to keep the credit flowing. Dave Lafferty, chief strategist at Natixis IM, reports: “If you were waiting for evidence that European monetary policy has turned the corner, you’ll definitely be disappointed… if not surprised.”