ECB: Further QE measures not likely to be approved in September - BBVA
Today the European Central Bank (ECB) kept rates unchanged and hinted at a stimulus package. According to the Research Department at BBVA,
Key Quotes:
“The ECB kept rates unchanged but reintroduced the easing bias on rates, requested studies on further measures and, importantly, started talking about a symmetric inflation aim Draghi is worried about inflation and the macro outlook of manufacturing.”
“Markets were even more dovish, pricing in a depo cut as soon as today with 50% probability and more clear signs of further QE.”
“Today’s statement and press conference was one of those examples of pre-announcement of upcoming measures. It seems quite clear now that a depo cut will be decided soon (we expect it for September now) together with a tiered system. Forward guidance will also be changed (no longer calendar-based).”
“We still think that further QE measures will not be approved in September, given the lack of unanimity, and the need to keep a second bullet in case it is needed (Draghi recognized during the press conference that the effectiveness of further QE is debatable). But its probability has no doubt increased.”
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
