From the FXWW Chatroom: ECB VIEW: ###(1/2) Views mixed on likely changes to ECB forward guidance Thur
– Morgan Stanley: Likely to see small changes in language (no longer says ECB
stands ready to increase QE but leave duration) at press conference to prepare
markets for end of QE in Q4 2018.
– TD: Think it’s more likely that all the key language remains unchanged. We
don’t believe that there has been enough progress in underlying inflation to
support a change in guidance quite yet. June meeting more likely, since ECB
should also announce plans for its QE after Sep – extend, taper, or stop.
– Commerzbank: ECB Council is likely to discuss its forward guidance. May drop
statement that it would increase QE if necessary. However, in view of statements
from some ECB Council members as well as recent CPI trends, we believe the
Council is more likely to postpone its decision once again.
– Barclays: We do not expect any change to the monetary policy set-up, and we
expect the forward guidance to be left unchanged, both for the APP and for
interest rates. Maintain view change will be in April. See staff forecasts
revised up in both growth & inflation..
– Morgan Stanley: Likely to see small changes in language (no longer says ECB
stands ready to increase QE but leave duration) at press conference to prepare
markets for end of QE in Q4 2018.
– TD: Think it’s more likely that all the key language remains unchanged. We
don’t believe that there has been enough progress in underlying inflation to
support a change in guidance quite yet. June meeting more likely, since ECB
should also announce plans for its QE after Sep – extend, taper, or stop.
– Commerzbank: ECB Council is likely to discuss its forward guidance. May drop
statement that it would increase QE if necessary. However, in view of statements
from some ECB Council members as well as recent CPI trends, we believe the
Council is more likely to postpone its decision once again.
– Barclays: We do not expect any change to the monetary policy set-up, and we
expect the forward guidance to be left unchanged, both for the APP and for
interest rates. Maintain view change will be in April. See staff forecasts
revised up in both growth & inflation..
ECB VIEW: ###(2/2) Views continued:
– CSFB: Expect ECB to be on hold but deliver a modest hawkish shift in tone at
press conference. Think ECB drop its symmetric policy bias that its prepared to
ease further if economic or financial conditions deteriorate but doubt will
provide specific end date for QE or when rates will rise.
– BNP: On balance ECB to opt for safe option and restate key aspects of its
forward language. Overall message should resemble Jan’s meeting that patience
and persistence are still warranted. See FG change in April or June, end QE in
Dec after short taper and deliver first depo rate hike in June 2019.
– Nomura: Easing bias of QE (stand ready to increase QE in terms of size and/or
duration) will probably be dropped or at least amended. Staff forecasts to
reflect heightened optimism on growth and inflation.
– Lloyds: Believe it is too early for majority to agree to forward guidance
change due to inflation remaining subdued. See relatively “dovish communication”
by Draghi to persist for now.
– CSFB: Expect ECB to be on hold but deliver a modest hawkish shift in tone at
press conference. Think ECB drop its symmetric policy bias that its prepared to
ease further if economic or financial conditions deteriorate but doubt will
provide specific end date for QE or when rates will rise.
– BNP: On balance ECB to opt for safe option and restate key aspects of its
forward language. Overall message should resemble Jan’s meeting that patience
and persistence are still warranted. See FG change in April or June, end QE in
Dec after short taper and deliver first depo rate hike in June 2019.
– Nomura: Easing bias of QE (stand ready to increase QE in terms of size and/or
duration) will probably be dropped or at least amended. Staff forecasts to
reflect heightened optimism on growth and inflation.
– Lloyds: Believe it is too early for majority to agree to forward guidance
change due to inflation remaining subdued. See relatively “dovish communication”
by Draghi to persist for now.
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