ECB to remain on hold in September

Analysts from Danske Bank changed their view and now expect that the European Central Bank (ECB) to remain on hold at the September meeting.

Key Quotes:

“We have changed our view and now expect the ECB to remain on hold at the meeting in September. We believe that in the ECB’s view the incoming information since July does not warrant additional easing. We still firmly believe the ECB will eventually extend QE purchases beyond March 2017 due to the lack of a sustainable path in inflation. However, for now, we expect it to keep its powder dry. A QE extension could be accompanied by changes to the purchase restrictions but we do not expect this to be announced in September.”

“Previously, we also expected a temporary step-up in QE purchases as we looked for a weakening in economic data. However, due to the surprisingly resilient economic sentiment despite the UK’s decision to leave the EU, we find it likely that the ECB will maintain the current pace of monthly purchases at EUR80bn.”

“In terms of rate cuts, we stick to our view that the ECB will not cut rates further. Back in March, the ECB stepped out of the currency war and instead focused on the bank lending channel, which is crucial in the transmission of monetary policy in the euro area.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.