ECB: Hawkish wording but changed forward guidance less likely – Danske Bank

Chief Analyst, Pernille Bomholdt Henneberg at Danske Bank, fading political uncertainty implies the way has been paved for more hawkish communication from the ECB at the meeting in June, bringing renewed market focus to the ECB’s exit strategy.

Key Quotes

“The ECB has many other options than removing the ‘or lower levels’ phrase in its forward guidance on policy rates and in order to avoid a tightening of financial conditions a more cautious approach seems likely.”

“The ECB’s key challenge is a lack of wage pressure and as long as there are no signs of improvement in the underlying price pressure, the ECB seems to stick to its policy stance in terms of policy rates, QE purchases and forward guidance.”