Analysts at ABN AMRO explains that the account of the ECB Governing Council meeting of 13 December shows that members discussed the economic outlook and the balance of risks to this outlook quite extensively.
“The account mentions that “reference was made to a recent deterioration in business confidence and disappointing PMIs, which “was seen as affecting business investment and cautioned against being complacent about downside risks to growth”. Also it was argued that, unless all shocks affecting the latest figures, which had been weaker than expected, were considered to be of a purely temporary nature, this should have moved the balance of risks to the downside”.”
“Still, on the other hand is was argued that “a further decline in oil prices since the publication of the ECB’s latest projections, and the likelihood of more stimulus coming from fiscal measures posed some new upside risks to the growth outlook”. Therefore, the Governing Council decided that it would communicate that “while the risks surrounding the euro area growth outlook could still be assessed as broadly balanced, the balance of risks was moving to the downside”.”
“We do not expect the ECB to end reinvestments until late in 2021. Finally, we expect a TLTRO extension to be announced in March.”
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