ECB: No changes expected to the purchase program neither to interest rates in the near future – Rabobank

Next week, the Governing Council of the European Central Bank (ECB) will have its monetary policy meeting. Analysts at Rabobank expect no major changes. They expect interest rates on hold for the foreseeable future.

Key Quotes: 

“We expect no major policy changes next week, as the ECB waits for more data on the economic outlook, developments on the fiscal front as well as the impact of its own measures.”

“To lay any doubts to rest, President Lagarde may re-emphasise that the full PEPP envelope is available. On the more technical side of policy, we see some room for the tiering multiplier to be increased to compensate credit institutions for the additional costs of the newly created liquidity. However, since there is no clear indication that the multiplier was raised in recent meetings, the Governing Council does not appear to see this as a very urgent matter, which means that this is certainly not a done deal.”

“We expect interest rates on hold for the foreseeable future. That said, we still see risks skewed towards a rate cut, although earlier inaction has proven the hurdle for this to be very high.”

“Recent hawkish comments that the PEPP envelope may not be fully used are premature. We believe that PEPP is the main instrument if further easing is required and we continue to see risks tilted towards more, not less, purchases.”