Will the ECB provide more clarity on updating their QE programme? - MUFG

Lee Hardman, Currency Analyst at MUFG, suggests that the market’s attention on central bank policies will focus today on the ECB’s latest monetary policy meeting which has the potential to be a market moving event.

Key Quotes

“Market participants are still eagerly waiting for an update from the ECB on their plans for their QE programme which is scheduled to expire at the end of March 2017. It is not necessarily the case that the ECB will provide further details at today’s meeting. A QE policy update is more likely to be provided at their December meeting alongside updated ECB staff forecasts.

However the longer the ECB waits to provide an update on the future of the QE programme, the more likely the market is to get nervous lifting euro-zone yields and the euro. It has already fuelled speculation that the ECB could begin to taper QE purchases, although senior officials were quick to downplay such speculation which would undermine the effective transmission of their current loose policy stance. The comments have contributed to the weaker euro in recent weeks.

At the very least today we would expect President Draghi to dampen QE taper speculation in the near-term if provided with an opportunity in the Q&A session. President Draghi could be asked as well about the heightened risks from a harder Brexit which he could utilize to stress that the ECB judges that risks to growth are to the downside.”