Francisco Vidal (Intermoney) | For yet another day, the spotlight is on the words of ECB members. They give their views on their particular vision of the course of inflation, with the consequent impact on the markets. And the latter react by interpreting the statements in terms of the central bank’s speed in withdrawing its stimuli. On Thursday, the Financial Times reported Philip Lane had said privately that they expect…
ECB monetary policy
JP Marín-Arrese | All was quiet on the ECB front for too long. Suddenly, last week it announced its intention to scale down the emergency asset-buying programme starting next month. While falling short of the tapering heralded weeks ago by Jerome Powell, it represents indeed a shift in the dull do-nothing approach followed for months and years. Once embracing quantitative easing, much later than other central banks, it proved unable…
Peter Allen Goves (MFS Investment) | The need to avoid premature tightening by the ECB and the strengthened guidance is supportive for core rates in our view. The strong association of guidance with the inflation outlook will also probably raises the prominence of the projections. Overall, the new guidance reinforces the ECB’s commitment to maintain accommodation to reach its price stability aim. Given that projections remain below target, this means…
On Thursday September 10, the ECB will meet and present its updated macroeconomic table, which will give us a better idea of its expectations regarding the pace of economic recovery (the August PMIs showed signs of weakness after the strong rebound from the April lows). The central bank will also update its view on current and future inflation levels with data once again showing very contained prices and in a context where the Fed is willing to tolerate inflation above 2% to obtain this figure as an average.
Caixabank Research |Monetary policy has reacted quickly and decisively to the COVID-19 pandemic. However, having successfully played the role of “fire-fighter”, the ECB will have to remain highly active to support the revival of the economy. In just four months the ECB has increased the size of its balance sheet by more than 1.6 trillion euros (+35%), as much as it did in the entire four years of the global financial crisis and the euro area’s double recession of 2008-2012. It took four years (2008-2012) to do so then.
Olivia Álvarez (Monex Europe) | The ECB will host its first 2020 monetary policy meeting next Thursday 23rd. The event is unlikely to bring any changes over policy tools after the accommodative package introduced in September, but rather, it could turn the attention towards any changes in the economic outlook facing the Eurozone and the strategic review vowed by new chief Christine Lagarde.
Christine Lagarde gave her press conference as the head of the ECB yesterday. While alerting of the risks that the eurozone is facing, she promised to maintain both the official rates and the monetary stimuli of her predecessor Mario Draghi. However, the market’s focus was on the announcement of a broad “strategic review” of the ECB’s monetary policy, the first since 2003. This was interpreted as a possible change in the ECB targets, including inflation below 2%. Banks bounced with over + 3%.
Caixabank Research | After a September full of announcements, the next ECB meeting (24 October) will be transitional, in one sense at least: 31 October will see the end of Mario Draghi´s mandate, the most charismatic president in the institution´s history.
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.
Joachim Fels (PIMCO) | By cutting the deposit rate to -50 basis points, extending forward guidance, introducing a two-tiered system for excess reserves that mitigates the adverse impact of negative rates on bank profitability, and resuming open-ended net asset purchases of EUR 20 billion per month, the European Central Bank (ECB) recently provided clarity about its prospective monetary policy stance for the foreseeable future and thus well beyond the change in leadership from Mario Draghi to Christine Lagarde that takes place at the end of October.