NEWS Breaking news

The ECB decision

The ECB has published an unchanged statement on its monetary policy.

Mario Draghi’s speech was moderate showing that there is no hurry at the ECB in the monetary policy management. No signal on a possible change in the QE framework in the future. The ECB president said that a decision will be taken at the October meeting but said nothing on details of the discussion. Nothing was said on scarcity of bonds in some country and on how capital keys could be respected.

Interest rates are unchanged and will remain low for an extended period. This stability will go beyond the end of the QE. As the ECB forecasts do not show higher inflation in the future and a convergence to the 2% target that will not take place before 2020 we can expect that ECB’s interest rates will remain at the current level (0% for the refi rate) at least until 2019. (see forecasts here)

QE is still at Eur 60bn until at least December 2017. It could be extended after this date if long term inflation expectations do not converge to 2%.

Philippe Waechter - Chief economist - Natixis Asset Management