Draghi's turn to come under the spotlight as ECB's monetary policies are due
- 1 month ago
ECB’ president Mario Draghi is skating on thin ice as the spotlight will be on as he will give his last monetary update of the year later today.
He may be leading the European Central Bank away from QE (quantitative easing) however he is also facing a slowing economy.
There is also the awaited publication of the economic growth and inflation for the upcoming 3 years and additionally the designs of the ECB’s reinvestments.
"We expect the ECB to announce at its meeting next Thursday an end to net-purchases under the APP programme," noted Natixis' Dirk Schumacher.
"While there has been a clear weakening in the economic environment, the ECB will argue that the reinvestment of the stock of bond holdings will ensure a continuing accommodative policy stance justifying an end of the program."
Economist Florian Hense added that, "The ECB will likely maintain its guidance that it will fully reinvest the proceeds and thus keep its bond holdings constant 'for an extended period of time' and 'for as long as necessary' to put inflation on track towards its target."
"The ECB may also state explicitly that full reinvestment will continue until well after the first rate. We expect full reinvestments to run until at least late 2020."
Not to add any further pressure, interest will also be directed at how Draghi plans to resolve the ongoing standoff between Rome and Brussels as the Italians face refinancing in the upcoming year.
Source: Smart Trend Team