Analysts at ANZ explained that several ECB speakers indicated overnight that the end of QE will be discussed as part of policy deliberations next week.
Key Quotes:
“In fact, ECB chief economist Peter Praet was unequivocal about this occurring. This will therefore be the first formal meeting (we know of) on winding down the program, and it may result in an announcement of the end date for bond purchases (or an indication of when such an announcement might occur).”
“Jens Weidmann spoke from the same song sheet, saying that inflation is expected to return to the ECB target and expectations that QE will end by the end of 2018 “are plausible”.”
“Growing market expectations of an end to the bond purchasing program have occurred at the same time that inflation expectations in the eurozone have been improving, and it appears that senior members of the Governing Council are comfortable that the fall off in economic momentum at the beginning of the year won’t continue.”
“Nonetheless, it is possible that nothing will materialise out of next week’s discussions; the ECB may wish to retain a cautious approach in light of downside risks, especially relating to recent political events.”
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