|

ECB: no further accommodation expected beyond March 2017 - Nomura

Analysts at Nomura explained that the ECB consistent outlook supports no increase in accommodation after March overall.

Key Quotes:

"The developments between September and today’s meeting have been supportive of the September ECB staff macroeconomic projections and contributed to no substantial change in the ECB’s growth and inflation outlook assessment. Paragraphs in the introductory statement from the October and the September meetings were roughly identical. On the growth side, the Governing Council continues to expect an ongoing expansion at a moderate but steady pace supported by monetary policy measures. Risks to the outlook remain skewed to the downside, mainly owing to the weak external environment.

On the inflation front, the ECB’s assessment sees headline inflation increasing further in 2017 and 2018 largely owing to energy base effects. However, the Governing Council noted that “there are no signs yet of a convincing upward trend in underlying inflation”, somewhat switching the focus to core inflation developments as the relevant parameter for its policy re-assessment away from the headline inflation prints.

As we emphasised previously, an outlook in line with its projections would see no need for a further increase in the level of policy accommodation. Therefore, in the absence of any downside risks materialising, which is supportive of the ECB’s projections, there is an increasingly substantial possibility of no further accommodation beyond March 2017 – a possibility that this meeting did not dispel.

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Editor's Picks

EUR/USD flat lines below 1.1900; divergent Fed-ECB expectations offer support

The EUR/USD pair struggles to capitalize on the overnight bounce from the 1.1835-1.1830 region and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 1.1875 area, remaining nearly unchanged for the day and staying within striking distance of an over one-week high, reached on Tuesday, amid mixed cues.

GBP/USD slips heading into the Thursday trading window

The Pound Sterling pulled back from four-year highs on Wednesday, weighed down by a combination of Bank of England dovishness and UK political uncertainty, even as the US Dollar weakened on soft labor market revisions. 

Gold posts modest gains above $5,050 as US-Iran tensions persist despite strong labor data

Gold price trades in positive territory near $5,060 during the early Asian session on Thursday. The precious metal edges higher despite stronger-than-expected US employment data. The release of the US Consumer Price Index inflation report will take center stage later on Friday. 

Bitcoin holds steady despite strong US labour market

Bitcoin briefly bounced from $66,000 to above $68,000 but slightly reversed those gains following Wednesday's US January jobs report. The top crypto is hovering around $67,000, down 2% over the past 24 hours as of writing on Wednesday.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

XRP sell-off deepens amid weak retail interest, risk-off sentiment

Ripple (XRP) is edging lower around $1.36 at the time of writing on Wednesday, weighed down by low retail interest and macroeconomic uncertainty, which is accelerating risk-off sentiment.