Previewing this week’s European Central Bank (ECB) meeting, “the ECB’s Governing Council meets later this week for its last monetary policy meeting under the leadership of Mario Draghi,” noted ABN AMRO senior economists Nick Kounis and Aline Schuiling.
Key quotes
“Having announced a package of measures last month, any further action looks unlikely at this meeting. However, the case for additional stimulus remains strong and it will be interesting to see whether the ECB explicitly recognises recent weak data, which would set the scene for further revisions in December.”
“Inflation will more likely remain subdued rather than rising in the coming quarters. The cyclical slowdown in economic growth means that cost pressures are leading to margin compression rather than price rises, while cost pressures are (and should continue) to ease going forward as labour markets loosen. At the same time, there are structural downward pressures on inflation from digitilisation and a fall in inflation expectations.”
“We expect the ECB to cut the deposit rate by another 10bp in December before announcing a step up in the pace of net asset purchases at the March meeting.”
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