ECB Preview: Here’s What Draghi Will Announce Today

Jon Alternative Media, Blogosphere, Economy, Fiscal Policies

Today’s ECB meeting is expected to be one of the most important in recent years: Mario Draghi has signaled, and is widely expected to announce a blueprint of what the central bank’s QE tapering will look like beyond 2017, and while no actual tightening will be implemented – either via rates of asset purchases – the ECB is expected to announce it will cut its 60bn/month bond purchases in roughly half starting in January 2018 and lasting for the next 9-15 months.
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Courtesy of RanSquawk, here are the key parameters of Thursday’s meeting:
Rate Decision due at 1245BST/0645CDT and Press Conference at 1330BST/0730CDT The ECB is widely expected to keep all rates on hold, with rate hikes not expected until after conclusion of current QE programme The ECB is expected to unveil a road-map for reducing the pace of asset purchases given rhetoric from Draghi at the previous press conference Consensus far from clear on how much the ECB will reduce purchases by and how long they will be extended for RATE/ASSET PURCHASE EXPECTATIONS
DEPOSIT RATE: Forecast to remain unchanged at -0.40%. The rate was last adjusted in March 2016, when it was cut by 10bps. REFI RATE: Forecast to remain unchanged at 0.00%. The rate was last adjusted in March 2016, when it was cut by 5bps. MARGINAL RATE: Forecast to remain unchanged at 0.25%. The rate was last adjusted in March 2016, when it was cut by 5bps. ASSET PURCHASES: Views on this front are particularly wide-ranging. A Reuters poll suggests that the ECB will start trimming monthly asset purchases to EUR 40bln from current EUR 60bln in January. Views are mainly split on whether this will be via a 6- or 9-month extension. However, Bloomberg News reports that the Bank will half purchases to EUR 30bln (a view backed by recent source reports) while extending the programme by 9-months in order to take the total size of purchases to around EUR 2.5trl; a level seen by some as their maximum purchase limit. (Discussed in greater detail later on in the report)

This post was published at Zero Hedge on Oct 26, 2017.