Research Team at Rabobank notices that the ECB made no changes to its policy or forward guidance but the meeting was somewhat less dovish than earlier meetings.

Key Quotes

“As widely expected, the ECB kept its interest rates unchanged at Governing Council meeting. The central bank also confirmed its plan to cut the asset purchases back to the original EUR 60bn monthly pace as of 1 April, and that these purchases are intended to run until the end of 2017, or beyond if necessary.”

“Similarly, the Governing Council decided not to change the forward guidance with respect to either of these instruments, reiterating that the Governing Council expects interest rates “to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases” and that they “stand ready to increase our asset purchase programme in terms of size and/or duration.”

“Though there wasn’t any change in what was said, notably something was left unsaid: The by now customary pledge that “if warranted to achieve its objective, the Governing Council will act by using all the instruments available within its mandate” was omitted from statement. President Draghi later explained that this should be seen as a consequence of the Council no longer feeling the same sense of urgency as it did previously.”

Losing some dovish feathers?

While the next staff projections (in June) might be too early to change the risk assessment to broadly balanced, we believe that today’s press conference still puts the ECB on track for an upgrade of the risk assessment –and a change to its forward guidance– later in the year.”

“The ECB upgraded its economic outlook. The risks remain tilted to the downside, although Draghi added that the risks have become less pronounced.”

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