ECB: Changes in communication coming in Sep or Oct - BBVA


According to the Research Department at BBVA, today’s message from the ECB meeting was in line with expectation. They still see QE tapering early 2018. 

Key Quotes: 

“At today’s monetary policy meeting there were no changes in the ECB’s monetary policy stance, as the central bank left key interest rates unchanged and confirmed that it intended to run the monthly asset purchases of €60 billion until the end of December 2017, or beyond if necessary. Mr Draghi highlighted also the unanimity of the Governing Council (GC) on its decision not to change their forward guidance: “we stand ready to increase our asset purchase programme in terms of size and/or duration.” 

“During the Q&A, the attention was focused on the roadmap of the monetary policy normalization process. Mr Draghi made clear that GC will take a decision in the autumn.”

“On the question whether tapering scenarios were discussed, he stated that none was discussed, and furthermore he clarified that the ECB staff has not been requested yet by the GC to develop scenarios for the APP (asset purchase programme) after December (when the current program of purchases is set to expire).”

“All in all, the message from the ECB was in line with expectations, as the central bank left its monetary policy unchanged, maintaining a cautious tone. Regarding the normalization process, our baseline scenario remains unchanged: we expect in September (or October at the latest) meeting the ECB to make changes in its communication by removing the downward bias on the APP, which will open the door to a slower pace of APP to start in early 2018.”
 

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