ECB Preview: ECB this week to toughen their language marginally - BAML

Bank of America Merrill Lynch (BAML) analysts offers a sneak peek into Thursday ECB’s monetary policy decision and its impact on the common currency.

Key Quotes:

“We expect the ECB this week to toughen their language marginally, by removing the easing bias on QE, while insisting on the need for prudence and a persistent monetary stimulus.

September pre-announcement of a decision on the future of QE in October;

October announcement that QE will be scaled back from EUR60bn to EUR40bn for 6m starting in January 2018; 

Regular tapering to follow in 2H18; 

End of QE in December 2018 accompanied by a technical deposit rate hike. 

The nature of the recent selloff and the shape of the Eonia curve suggest the market is pricing in the end of QE could be as early as June 2018. This is also supported by our survey results.”