Today, the European Central Bank left interest rate unchanged as expected. According to analysts from Danske Bank, next meeting (December 13) is likely to move markets, as significant decisions have to be taken.
Key Quotes:
“ECB President Mario Draghi provided some interesting assessment during the press conference. He acknowledged that recent incoming data has been weaker than expected but tried to soften this by putting it into the context of growth returning to potential from the elevated levels last year and some country-specific/transitory factors affecting momentum in Q3. We see scope for a political will to end QE here playing into the assessment and acknowledging downside risks would probably complicate the policy change communication.”
“The ECB’s language on the assessment of the inflation outlook remains broadly unchanged.”
“Draghi also refrained from giving any indication on the capital key update but tried to downplay the importance. We beg to disagree, as this matters for the reinvestment strategy.”
“The December meeting will be a very interesting one, where the ECB will formally end QE, outlining the reinvestment strategy including the capital key, update of staff projections (which may contain a downward revision to 2018 growth projection) and the inflation assessment, particularly if downside misses persist.”
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