The ECB's next moves - ING
|"With the growth picture looking very strong, the calls to end the ECB’s expansionary monetary policy will grow louder," ING economists note.
Key quotes
The president of the Bundesbank, Jens Weidmann repeated in an interview with Spanish daily El Mundo that the ECB should set an end-date for its asset-buying program. That said, a majority within the Government Council will want to avoid the repeated mistake of premature tightening, certainly given the stubbornly subdued inflation dynamics.
But even if backpedalling on its announced QE timeframe looks out of the question, a small change in communication is not to be excluded. Indeed, from the minutes of the December meeting, it transpired that “the view was widely shared among members that the Governing Council’s communication would need to evolve gradually, without a change in sequencing, if the economy continued to expand and inflation converged further towards the Governing Council’s aim”.
We still expect a short lengthening of the asset purchase program until December 2018, to allow some further tapering. While net asset purchases will definitely have ended at the start of 2019, a first rate hike might have to await the summer of 2019.
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