The ECB's strategy review: only small tweaks? – Rabobank
|The ECB concluded its strategy assessment yesterday. The review does not suggest major changes in the conduct of monetary policy, nor in the communication of its policy decisions, Rabobank's Senior Macro Strategist Bas van Geffen reports.
Lower odds of rate cuts despite 2026 inflation undershoot
"The ECB confirmed its 2% inflation target. Policymakers will respond forcefully to large, sustained deviations from the target. However, the review arguably also allows for a little more tolerance for smaller divergences. Arguably, this lowers the odds that the ECB will respond to the expected inflation undershoot in 2026."
"Policy rates remain the main instrument, but the review suggests that the ECB will not exhaust this instrument before policymakers consider alternatives. If further easing is required, e.g., in response to an escalation of the trade war, this could lead to a policy mix where interest rates are not slashed to zero, but the ECB restarts QE instead."
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.