ECB Review

  • ECB didn’t deliver new policy signals during today’s meeting, which on the face of it was rather uneventful. As usual, the devil is in the detail and today’s meeting highlighted risks ‘gaining more prominence’ and the confidence in its inflation outlook prevailed.
  • Rates markets were trading broadly sideways through the press conference, while the EUR/USD traded higher also, weighted by the weak US CPI number.

Just like the July meeting, today’s meeting was cut short of the usual 15:30CET limit. The most interesting today was the update of the staff projections (see below) and the inflation assessment: not to forget the increased prominence of the wage dynamics in the introductory statement (IS) and the press conference (‘wage’ was mentioned three times in the IS). The reinvestment strategy was not discussed today, not even when to discuss it, although he later clarified it would be in October or December this year. In June Draghi said that they would revisit this in the coming meetings. We favour a decision at the December meeting. It was mentioned that the capital key is the guiding principle.

ECB staff projections

ECB’s new economic forecasts saw downward revisions to the growth outlook but broadly unchanged confidence in building up inflation pressures:

  • Rising global headwinds to growth outlook: Reflecting weaker external demand, the ECB lowered the growth forecasts for 2018 to 2.0% - in line with our view - from 2.1% and for 2019 to 1.8% from 1.9%, while leaving the projections for 2020 unchanged at 1.7%. Risks to the growth outlook were still judged to be broadly balanced but uncertainties related to rising protectionism, vulnerabilities in emerging markets and financial market volatility have gained more prominence.

Download The Full Economic Indicators

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.