The ECB holds its policy meeting later today. What can we expect from policymakers with regard to asset purchases?
Here is their view, courtesy of eFXdata:
SEB Research discusses its expectations for the ECB policy meeting.
“Under the already announced programmes, the ECB’s net asset purchases total EUR 1110bn in 2020. Assuming a linear distribution, this equals around EUR 112bn / month between mid -March and end -December. We expect the ECB to repeat that purchases can be increased if needed but regard it as unlikely that the bank would specify an explicit increase already now,” SEB notes.
“The ECB needs to address the rise in Euribor rates, but the solution is more complicated. The easiest way to support banks’ unsecured funding would be to increase government bond purchases in the very short maturities and expand the corporate bond purchase program to include banks.
Nothing stops the ECB from buying the 1 -2y sector already now, but buying bank credit is unlikely. Therefore, the ECB just needs to keep adding liquidity and hope that investors increase the demand for bank credit enough,” SEB adds.
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