AFP, Frankfurt :
The European Central Bank, convinced that its controversial bond purchase programme is working, will nevertheless remain cautious about the outlook for growth in the euro area at its meeting today, analysts said.
The ECB’s decision-making governing council is unlikely to announce any new moves at its regular policy meeting, central bank watchers predicted.
Instead, analysts said they would be looking out for what ECB president Mario Draghi has to say about the effectiveness of the programme so far and also the situation in Greece.
“No decisions are likely to be made at the ECB meeting,” said Berenberg Bank economist Christian Schulz.
But he expected Draghi “to take a cautious tone on the economic outlook, offer a clear commitment to continuing quantitative easing (QE) at least until September 2016 and warn governments on structural reforms”.
Natixis economist Johannes Gareis agreed. “We do not expect a policy change,” he said. “Draghi will most likely express strong commitment to full QE implementation until September 2016 or even longer.”
In March, the ECB embarked on a programme of so-called quantitative easing or QE, buying up 1.14 trillion euros ($1.3 billion) in assets-at a rate of 60 billion euros per month-until September 2016.
The aim is to inject liquidity into the financial system and push up the eurozone’s chronically low rate of inflation.
Executive board member Benoit Coeure caused a stir two weeks ago when he announced that the ECB could “frontload”-or temporarily ramp up-the purchases prior to the summer drop-off in liquidity.
And Draghi could hint at even more frontloading if the underlying macroeconomic backdrop justified it, analysts said. According to the minutes of the governing council’s last meeting in April, while the central bank chiefs saw a case for “guarded optimism on the short to medium-term outlook for the euro area economy,” they still felt it was important “to remain cautious” given the prevailing economic headwinds.
Hence, there is no talk of scaling back QE just yet.
The ECB will publish its latest updated forecasts for growth and inflation in the 19 countries that share the euro.
The European Central Bank, convinced that its controversial bond purchase programme is working, will nevertheless remain cautious about the outlook for growth in the euro area at its meeting today, analysts said.
The ECB’s decision-making governing council is unlikely to announce any new moves at its regular policy meeting, central bank watchers predicted.
Instead, analysts said they would be looking out for what ECB president Mario Draghi has to say about the effectiveness of the programme so far and also the situation in Greece.
“No decisions are likely to be made at the ECB meeting,” said Berenberg Bank economist Christian Schulz.
But he expected Draghi “to take a cautious tone on the economic outlook, offer a clear commitment to continuing quantitative easing (QE) at least until September 2016 and warn governments on structural reforms”.
Natixis economist Johannes Gareis agreed. “We do not expect a policy change,” he said. “Draghi will most likely express strong commitment to full QE implementation until September 2016 or even longer.”
In March, the ECB embarked on a programme of so-called quantitative easing or QE, buying up 1.14 trillion euros ($1.3 billion) in assets-at a rate of 60 billion euros per month-until September 2016.
The aim is to inject liquidity into the financial system and push up the eurozone’s chronically low rate of inflation.
Executive board member Benoit Coeure caused a stir two weeks ago when he announced that the ECB could “frontload”-or temporarily ramp up-the purchases prior to the summer drop-off in liquidity.
And Draghi could hint at even more frontloading if the underlying macroeconomic backdrop justified it, analysts said. According to the minutes of the governing council’s last meeting in April, while the central bank chiefs saw a case for “guarded optimism on the short to medium-term outlook for the euro area economy,” they still felt it was important “to remain cautious” given the prevailing economic headwinds.
Hence, there is no talk of scaling back QE just yet.
The ECB will publish its latest updated forecasts for growth and inflation in the 19 countries that share the euro.
