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14 Apr 2015
ECB’s biggest challenge to manage QE expectations – ING
FXStreet (Barcelona) - With ECB policy meeting near, Carsten Brzeski of ING, views that the major challenge for Draghi would to re-confirm that QE will continue until September 2016.
Key Quotes
“For this week’s meeting, the ECB’s biggest challenge is probably to manage expectations. ECB president Draghi will have to continue his ‘good-news show’ on the Eurozone economy but sprinkled with some notes of caution, to avoid any premature taper speculations.”
“In a sense, it is the irony of the ECB’s QE that doubts and criticism are now followed by first-tapering speculation only after one positive month. Comments by ECB member Yves Mersch last week suggested that the ECB is not deaf to these speculations. According to Mersch, the September 2016 deadline is not written in stone, and both under- and over-shooting of inflation expectations could lead to altered QE.”
“In our view, at the current juncture, any of these tapering discussions are counterproductive and could undermine the full impact of QE. Therefore, we expect Draghi to stress that QE will continue at least until September 2016.”
“If and when the recovery really becomes sustainable in the coming months, we expect Draghi to place more emphasis on output gaps and high unemployment to justify QE to the very end.”
Key Quotes
“For this week’s meeting, the ECB’s biggest challenge is probably to manage expectations. ECB president Draghi will have to continue his ‘good-news show’ on the Eurozone economy but sprinkled with some notes of caution, to avoid any premature taper speculations.”
“In a sense, it is the irony of the ECB’s QE that doubts and criticism are now followed by first-tapering speculation only after one positive month. Comments by ECB member Yves Mersch last week suggested that the ECB is not deaf to these speculations. According to Mersch, the September 2016 deadline is not written in stone, and both under- and over-shooting of inflation expectations could lead to altered QE.”
“In our view, at the current juncture, any of these tapering discussions are counterproductive and could undermine the full impact of QE. Therefore, we expect Draghi to stress that QE will continue at least until September 2016.”
“If and when the recovery really becomes sustainable in the coming months, we expect Draghi to place more emphasis on output gaps and high unemployment to justify QE to the very end.”