After Draghi talked about more QE but did not detail, the ECB convenes again and yet again no change is expected. Nevertheless, markets can certainly move:
Here is their view, courtesy of eFXnews:
European Economics | Danske Bank Markets
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We do not expect any new announcements from the ECB at the meeting next week. President Mario Draghi will, in our view, balance his tone, reflecting the economic resilience to political uncertainty on the one hand but on the other hand, sound dovish, as the ECB is concerned about the subdued underlying price pressure and weakness in the banking sector.
We expect Draghi’s main message to be that the ECB’s focus is on full QE implementation. Draghi has remained on the sidelines in the recent tapering debate, which started after ECB officials allegedly said that the ECB is considering QE tapering options once the programme ends. In our view, it is too early to discuss tapering but following last week’s unconfirmed reports, it will remain a topic going forward. At the following ECB meeting in December, we expect the ECB to announce an extension of the QE purchases by six months without pre-announcing tapering. The QE extension should follow although inflation is set to rise in coming months but reflect the lack of upward trend on core inflation. In our view, there is a risk the ECB will extend QE again later due to low core inflation.
We do not expect the ECB to adjust its self-imposed QE restrictions ahead of a potential extension of the purchases in December. In our view, the ECB could continue to deviate from the capital key without introducing new buying distribution. Currently, we do not consider it very likely that the ECB allows large-scale buying below the deposit rate.
European Economics | SEB
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In September the ECB sent no signals that additional monetary easing was warranted. Indeed, its Governing Council only asked the relevant committees to consider the alternatives available, to ensure smooth implementation of its asset purchasing programme (APP). At the IMF meeting in October, ECB President Draghi seemed optimistic that the euro area would reach its inflation target at the end of 2018, and certainly not later than the beginning of 2019. Consequently, the Governing Council appears confident that no additional monetary stimulus is necessary to reach the target.
Therefore, we expect the ECB to leave its monetary policy stance unchanged after the October meeting and to await December staff projections before deciding the APP’s terms, conditions and timeline. Of course, the central bank’s easing bias will continue.
We expect the ECB to stress yet again that policy rates will remain at their current levels well beyond the end of net asset purchases.
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