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Carsten Brzeski, chief economist at ING, suggests that ECB’s meeting this week will also be Mario Draghi’s last as President and they expect it to be short and brief on facts and decisions but rather long on emotions.

Key Quotes

“What do we expect?

  • Confirmation of the economic assessment.  The macro data released since the September meeting as well as recent speeches and statements from ECB officials provide very little reason for changes to the macro assessment. Instead, the ECB will very likely confirm the view of a longer-than-expected economic slowdown with no signs of a bottoming out of the manufacturing slump but tentative signs of contagion to the domestic economy. Against the background of continued external risks and increased economic uncertainties, the inflation outlook should remain weak as well.
  • Reiteration of September decisions.  With no changes to the economic assessment, the ECB’s monetary policy stance should also remain unchanged.
  • Downplaying of internal divergence.  This will be the most interesting part of the press conference. Will Draghi address the growing criticism and voiced opposition from within the ECB’s Governing Council or will he simply downplay it? We expect Draghi to come up with a strong (emotional) plea in support of the September package, probably combined with a broader attempt to safeguard the legacy of all measures taken under his leadership. Draghi will probably also stress the fact that the ECB’s unconventional measures did have a significant impact on growth and inflation over the last few years, thereby justifying the September package.
  • No hints at additional measures.  As this will be Mario Draghi’s last meeting at the ECB and as there have been no significant changes to the economic situation, we don’t expect any hints at future measures. Instead, Draghi will try to stress the ECB’s determination to act in the future.”