The one ‘economic event’ of note is the minutes of the ECB’s last policy meeting and these carried a very positive tone as growth remained strong and confidence at record highs, explains the research team at Westpac.
“Yet their optimism remained conditional on a policy stance in “crisis configuration” (that is, extraordinarily easy monetary policy). In time, an increasingly self-sustaining growth cycle will see the ECB Governing Council bring asset purchases to an end, and plans to raise rates come to light. We see the first event as occurring at the end of the year (or, if conditions improve further, potentially at the current program’s September end date), but the latter not until well into 2019.”
“In the interim, from as early as the next policy meeting, a gradual firming of the language used to describe the economy will be seen to slowly ‘make known’ to the market the ECB’s intent. It has to be said though, given the Euro’s gains against the US dollar during the past month, the market looks to have already pre-empted this shift in forward guidance.”
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