mario draghi italy

Italy’s Presidential Race Puts a Strain on Political Balance

*This article was originally published by Fair Observer Alissa Claire Collavo | Italy’s parliament gathered in a joint session of both houses on January 24 to elect the country’s next president who will succeed Sergio Mattarella, whose term will end on February 3. A total of 1,009 voters, including 58 delegates chosen by regional councils and known as “great electors,” took part in the first stage of voting, which will be repeated every…

draghi black

Draghi Outwits Markets With A Half-Way Tapering

Most observers bet the Draghi would further extend its current asset purchase programme, shoring up confidence in the face of troubled times ahead.  Some believed it might reduce the monthly volume, showing its intent to scale down little by little its massive balance sheet.


Vigilant Of Second Round Effects

BoAML | We have remained quite bearish on Euro area inflation for the past few years, particularly compared with ECB forecasts (but also consensus), and have highlighted the many downside risks to the inflation outlook.

ECB walks

Draghi Keen Not To Add Fuel To The Controversy Of Helicopter Money

UBS | As expected, yesterday’s ECB meeting provided neither new stimulus nor major new guidance on the policy outlook. The discussion was dominated by helicopter money (which according to Mr Draghi has not been discussed), the German criticism of the ECB’s low interest rate policy (which Mr Draghi diplomatically rejected) and the issue of whether or not interest rates could go down further (which could happen, if necessary).


The ECB Can Only Wait For Now

BofAML | No surprises. We do not expect any ECB action this week. After the package in March, we think the ECB will have a few months before going back to the drawing board. Dovish Fed tones and EUR appreciation do not help the ECB, but action beyond a reiteration of forward guidance seems very unlikely.

euro BCE

The euro has become Draghi’s next problem

The ECB could end up with a new headache if the euro continues to appreciate as it has done over the last few weeks. In a short space of time, the eurozone currency has gone from 1,08 dollars to 1,14 dollars. Analysts believe Draghi will have to take some kind of action if it goes over 1,15 dollars.

santander recurso

Spanish Banks Likely to Avoid the “Swiss rate” scenario

UBS | President Draghi surprised the market positively, both in terms of the magnitude of some of the expected moves (QE extension in the upper end of the range) and also implementing new measures (acquisition of non-financial IG bonds in its asset purchases, and new targeted TLTRO). For (retail) banks like the Spanish, the balance of ECB’s actions has to be considered as positive, especially if trends seen in the swap market are confirmed in Euribor fixings.


Swiss Experience Could Pave Draghi’s Way On Deposit Rate

The market consensus is that the ECB will cut its deposit rate at tomorrow’s monthly meeting. The question is by how much. Consensus points to 10 bps to -0.4%, while other more agressive bets point to -0.55%. Switzerland has applied a negative deposit rate since January 2015, but experience seems to show this option is counterproductive for the banking sector.