No new actions, but dovish words
There is no immediate pressure for the ECB to act at this week’s meeting and hence we expect a fairly calm press conference with no revolutions. We expect that the key rates will be kept unchanged and that the “extended period” wording will remain in place. The general tone is likely to be dovish, in our view.
Data have improved steadily during the summer, and confidence indicators from the consumer and the corporate side suggest that the improved momentum is likely to be sustainable in the near term. The ECB is likely to be very happy about these improvements, but an easing bias is clearly warranted for the time being. Indeed, the ECB will remain concerned about a number problems including higher market rates, weak credit growth, high unemployment, limited progress on the banking union and still high debt levels in most Euro-area economies – all problems with the potential to derail the recovery.
Thus, we believe ECB President Draghi will strike a fairly dovish tone and keep the door wide open for more easing if need be.
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Nordea