Jan von Gerich, analyst at Nordea Markets, explains that the ECB remains optimistic that the Euro-area economy is going through only a temporary soft patch, but the worries about longer-lasting weakness are increasing.
Key Quotes
“Risks remain tilted towards further easing measures later this year.
- The ECB’s monetary policy account showed that despite a baseline of a rebound in activity later this year, worries within the Governing Council are increasing
- Some members would have preferred to extend the forward guidance even further
- The account did not provide many hints on what the ECB intends to do next
- Further extensions in forward guidance and more attractive terms in the TLTROs are the primary further easing measures”
“The ECB delivered another easing package in the March meeting, consisting of strengthened forward guidance, new liquidity operations and prolonged full allotment regime in the refinancing operations. The account from the meeting showed that while the ECB’s baseline remained a rebound in growth later this year, worries about a weaker development were increasing.”
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