FXStreet (Córdoba) - Michael Schubert, analyst at Commerzbank, notes that even though the ECB will likely adopt a wait-and-see mode at today’s meeting, Draghi is set to leave the door wide open for QE at the press conference.
“After the package of measures agreed last month, we expect no further decisions at the Governing Council meeting on Thursday. The ECB will probably want to wait and see what impact the steps taken so far will have. At the same time, ECB president Draghi is set to leave the door wide open for QE at the press conference. We do not expect further details on the planned ABS purchase programme at this meeting”.
“Several ECB representatives signalled last week that the Governing Council first wants to wait and see how things unfold after the steps announced in June”
“ECB president Draghi will likely keep the door wide open for broad-based asset purchases (QE) at the upcoming press conference, even if he is unlikely to announce any further decisions on Thursday. This is because such verbal intervention helps to decouple domestic market rates from a possible rise in interest rates in the USA and the UK and weaken the euro”.
“Secondly, it should be clear to everyone in the ECB Governing Council that QE is probably the only means available if medium-term inflation expectations tumble again significantly, contrary to our (and the central bank’s) expectations”.