ECB: 3m Taper announced while rates remain on hold - TDS

The ECB announced the end of its QE programme today, with a 3m taper at €15bn/month through to December 2018, notes Jacqui Douglas, Chief European Macro Strategist at TDS.

Key Quotes

“The rate guidance was also made much more explicit, replacing "well past the horizon of the net asset purchases" with "at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path."

“The wording through the summer of 2019 suggests that we won't see rate hikes until September at the earliest, so the ECB has effectively told the markets that the previous "well past" language that was understood by markets to mean around 6 months, actually means at least 9 months in their view.”

“The fact that the ECB was comfortable enough with the outlook to call a definitive end to QE today suggests that Draghi is going to remain fairly upbeat about the growth outlook despite the downside surprises we've seen recently, in order to justify the end of QE.”

“With an upbeat press conference likely on the way, we think that this will put a floor under EUR.”