Richard Kelly, head of global strategy at TD Securities, points out that today’s ECB decision has given green signal for the end of its QE program.
Key Quotes
“The ECB decision today confirmed our expectations that (1) QE will end this month, (2) forward guidance on rate hikes is unchanged to start some time after summer 2019, and (3) forward guidance on reinvestments will now continue for an extended period of time after the ECB hikes rates.”
“The forward guidance on reinvestments was needed to make sure the market saw a clear staging for rate hikes and reinvestment. We think this should confirm the ECB will continue full reinvestments at least through end-2020, though Draghi may not be explicit on that date.”
“We now move on to press conference where we expect Draghi to provide small downside tweaks to the growth and inflation forecasts (as confirmed in leaks earlier today), leave the door open to TLTROs but not suggest they are imminent and/or definite, and generally strike a tone that they are mindful of the deceleration and risks they are seeing, but think they continue to be on track.”
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