Draghi seem more concerned about Italian banks than Brexit – Deutsche Bank

Research Team at Deutsche Bank, notes that in terms of the ECB, Draghi did seem more concerned about Italian banks than Brexit but he helped the whole banking sector by suggesting that a state backstop was a 'very useful' way of dealing with NPLs.

Key Quotes

“He also suggested that there was room to offer state aid thus offering some confidence that a deal in Italy can be done.

Back to Draghi, in terms of further monetary policy he certainly left the door ajar without pre committing. Our economists' expectations remain unchanged. They feel that post the Brexit vote there are new downside risks to the economic recovery and the normalization of inflation. They don't think a deposit rate cut is appropriate given the pressures on banks. Instead they expect a 9-12 month extension of the timeframe of the QE programme at the next meeting in September as well as complementary measures to ensure this is credible by making sufficient assets eligible for the programme.”