ECB: Draghi likely to maintain dovish policy guidance - AmpGFX

In view of the analysts at Amplifying Global FX Capital, Draghi will presumably lean heavily on the lower core inflation reading in March as supporting the case for maintaining its dovish policy guidance. 

Key Quotes

“Over recent weeks, Key ECB Council members discouraged thoughts that the ECB would shift its QE and rates policy guidance in the meeting this week, countering some comments from ECB member policy hawks in late March that they might support a shift in guidance. The current guidance on rates is still quite dovish (at present or lower levels for an extended period, well past the horizon of net asset purchases). However, it is somewhat contradictory to the removal from its statement that it will use all instruments in its mandate, suggesting lower rates are no longer on the table.”

“The introductory statement is not expected to change, but there is some risk that the ECB tweaks it again.  (Such as describing risks as more balanced, or removing the “or lower levels” from its rates policy guidance).”

“The market is increasingly focused on the timing of a shift towards normalizing policy.  At the 9 March press conference, the market reacted to any slight wavering in the Draghi commitment to persisting with low rates beyond the QE program end.  He may attempt to deflect any questions by saying normalization of policy were not discussed at the meeting, but it will be difficult for Draghi to unequivocally commit to the current policy guidance.”