ECB: A very, very steady hand - Westpac

According to Elliot Clarke, Research Analyst at Westpac, the ECB’s own January meeting minutes showed a very, very steady hand.

Key Quotes

“Despite successive positive surprises on growth and the labour market, the ECB Governing Council is not yet at a stage where they would consider dropping the option to increase purchases – if conditions deteriorate. This shows lingering concern regarding the sustainability of the current growth cycle. This does not challenge the view that policy will be tightened hence. But rather that it will be a more protracted process than some market participants expect.”

“We see the ECB’s asset purchases continuing to the end of 2018 and a first hike in the refinance rate being put off until late 2019. That said, in early 2019, the deposit rate will be brought back to zero, ending the negative interest rate experiment.”