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According to analysts at TD Securities, the ECB eased its policy stance today, against consensus expectations, by both extending its time-contingent forward guidance and launching a new series of TLTROs.

Key Quotes

“This is clearly a more dovish outcome than expected, and shows that the ECB is much more worried about the slowdown in growth at the turn of the year.”

“The shift in forward guidance to effectively rule out a rate hike in 2019 has limited impact on what is priced into the market, but delivering new fixed-rate, full-allotment, 2y TLTRO III auctions every quarter from Sep 2019 through March 2021 provides more of a pro-risk driver for the market to compress credit spreads than an outright trade on lower core rates.”

“The focus for the press conference will now be how Draghi addresses the potential conditions needed for rate hikes next year, but they have really left little on the table now for new, near-term action.”