ECB to begin slow process of rate hikes late 2018 - Wells Fargo

Analysts from Wells Fargo, expect the European Central Bank to announce a reduction in the QE program on Thursday from EUR 60billon a month to EUR 40billion. They see a slow process of rate hikes starting late in 2018. 

Key Quotes: 

“The European Central Bank has administered an extraordinary degree of monetary accommodation to the Eurozone economy over the past few years. Not only did it take its deposit rate into negative territory in mid-2014, but it also embarked on a quantitative easing program in early 2015. At their peak, bond purchases by ECB totaled €80 billion per month, but the Governing Council pared back the monthly purchase rate to €60 billion earlier this year.

“The Eurozone economy continues to gather momentum and most analysts, ourselves included, look for the Governing Council to announce another reduction in the bond purchase rate at the policy meeting on Thursday that likely will take effect early next year. In our view, the ECB will cease buying bonds altogether next year, although the exact timing in somewhat uncertain. We also look for the Governing Council to begin a slow process of rate hikes in late 2018.”