According to analysts from Danske Bank, Thursday ECB meeting is one for the “geeks” and may contain few changes on the details and technical adjustments.
“In the July meeting and subsequent minutes, the ECB/Mario Draghi pointed to content on (1) economic developments albeit highlighted risks and (2) markets’ response to the firmer forward guidance. Since then, data has broadly come in according to expectations, which we conclude does not warrant new policy signals from the ECB”.
“The new staff projections for 2019 and 2020 may be revised down marginally compared with the June projections. We expect the ECB to revise down marginally both the headline and core inflation profiles (1.8% core by end-2020). Note that we are more downbeat than the ECB on inflation projections due to the assumption on pass-through of wage growth to inflation.”
“Growth has been lower than the ECB expected and with lingering risks from protectionist measures, we expect the ECB to lower its 2018 and 2019 GDP growth forecasts.”
“We find the current ECB pricing on the ‘fair to dovish side’ towards the end of 2019. Uncertainty regarding the size of the first rate hike complicates the discussion.”
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