According to analysts from Danske Bank, the decision, the statement and the press conference after today’s European Central Bank meeting contained no major surprises.
Key Quotes:
“The decision released at 13:45 CEST contained no major surprises, just like the rest of the press conference (starting 14:30 CEST). To our knowledge, it was the shortest press conference in ECB history, with reporters having no further questions after 25 minutes of questions. On the details, there was a little change in the decision but we attribute this to headline inflation being 2.0% in June.”
“Draghi was at ease with the effects of a looming trade war. He also pointed to stabilising survey results, which all in all should be interpreted on the hawkish side.”
“The ECB was a little more confident on inflation and, in particular, domestic price pressures, which now are not only ‘strengthening’ but ‘strengthening and broadening’. In particular, we find it interesting that Draghi mentioned negotiated wages several times as an underlying component of wage growth.”
“Markets saw a relatively muted reaction today. In our view, this supports our view that we are currently in a carry-friendly environment.”
“Specifically for rates, Draghi gave no new colour on the reinvestment policy despite the ‘operation twist’ speculation ahead of the meeting.”
“We doubt many market participants had really thought that Draghi would discuss a change in reinvestments today and the impact should be modest. Draghi also clearly underlined that the ‘capital key’ remains the guiding principle. Hence, there is no support for speculation that an ‘operation twist’ could also mean bigger einvestments in high debt countries at the expense of low-debt countries.”
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