On Thursday, the Governing Council of the European Central Bank will held its monetary policy meeting. According to the Research Department at BBVA, the central bank is likely to back the minutes from the October meeting. They do not expect significant changes in the economic forecasts.
Key Quotes:
“In her first meeting as ECB President Mr. Lagarde is likely to back what October minutes showed calling for patience to let the new easing package take effect on the economy and the inflation outlook. Moreover, she will focus in stressing that more efforts on fiscal policy by governments along the lines that she recently said that the ECB’s accommodative monetary policy would “achieve its goal faster and with fewer side effects” if euro area governments supported it with fiscal policy. It is likely that she would make a reference to the review of its monetary policy strategy, emphasizing what she recently stated in one of her latest speeches that the new strategy will be guided by principles of thorough analysis and an open mind.”
“We no longer expect a depo rate cut as risks have moderated and the ECB seems less likely to ease further (but it cannot be ruled out if conditions deteriorate).”
“Since the last ECB meeting, there has been some improvement in growth and inflation, though risks persist. Hard data up to September point to a halt in the deterioration of manufacturing and exports, while retail sales grew at steady pace driven by still improving labor market conditions. As a result, eurozone growth stabilized at 0.2% QoQ, slightly better than expected.”
“We do not expect significant changes in the ECB updated forecast, maintaining a gloomy growth outlook and a gradual increase in core inflation over the forecast horizon.”
Share
