Investing.com – While investors prepare for the latest decision of the monetary policy of the European Central Bank (ECB) this Thursday, the markets are convinced that there are announced changes in the interest rates or the program of purchase of assets, although the chairman of the monetary authority, Mario Draghi, could indicate when he believes that there could be a hypothetical reduction of the purchase of bonds.
The last of the ECB will be announced at 12:45 London time (13:45 in Spain), although there is little expectation that they take no action after the central bank surprised markets in December by stating that it would expand its monthly program of buying bonds until the end of the year, but reduced the amount to 20,000 million EUR up to a total of 60,000 million EUR from April.
most of the attention will focus on the 45 minutes after the announcement.
Claiming the policy measures adopted in December, Morgan Stanley dismissed the possibility of take any action at this meeting.
“investors probably will focus on whether the improvement of the figures on growth and inflation has some effect on the way of thinking of the ECB”, said analysts in a note to clients.
The resurgence of inflation, both in Germany and in the euro zone in general, has led to new calls by German economists for the ECB to raise interest rates and reduce its monetary stimulus.
The inflation of the region in general up in December compared to 0.6% in November, but the experts at Brown Brothers Harriman believe that Draghi could emphasize that data collected in a single month are insufficient to cause a change in the monetary policy.
“Also warn about the risk of drawing hasty conclusions based on the data of a single month, it might also be noted that the increase in the general inflation is mainly as a result of energy prices “, they added.
The core rate of inflation was only in December, well below the 2% target set by the ECB.
Goldman Sachs has highlighted this gap between general inflation and underlying inflation in a note to clients:
“The basic effects negative for January and February probably will drive even more general inflation, while the opposite occurs with the underlying inflation, which our economists estimate that it will remain around 0.8% in 2017 and 2018, well below the forecasts of the ECB,” said the broker.
The economists of Moody’s Analytics pointed out that the rise in inflation in Germany could wake up to the naysayers of the quantitative easing.
“however, we believe that any discussion on how to reduce the purchase of assets is premature and we are confident that the ECB will wait until price growth is sustainable, and reduce policy uncertainty", they declared.
A recent survey by Reuters concluded that the next step of the ECB’s monetary policy after April, that is when it will reduce its monthly program of bond-buying, will be to reduce the volume of the program of quantitative easing, citing signs of economic stabilization and rising inflation.
In this same line, the analysts of Standard & Poor’s noted that “it is likely that the monetary policy will retain its accommodative until the inflation underlying experience an adjustment to its sustained path, probably not before 2018″.
Analysts at UBS also trust that the ECB will refrain from implementing reductions in the amount of asset purchases until early 2018.
“With this background, the ECB decision could occur as early as next September 7th or the 14th of December, at the latest,” predicted.
however, economists from Deutsche Bank have acknowledged that the announcement of these reductions could occur earlier.
“If you continue the current trend of the data, the final decision could be speeded up and announced in June instead of in September, even though September is our starting point,’ they noted, adding that “half of the year is the earliest that the weak underlying inflation could meet the minimum conditions for the adjustment of the monetary policy”.
With this calendar of fund, UBS has explained what it is that they expect that Draghi mentioned at the press conference: “(a) the surprisingly positive PMIs from euro zone and the recovery of inflation in December and its likely implications in terms of the forecasts of monetary policy; (b) efforts to meet the challenges in the banking sector Italian; (c) the results of the new survey of bank loan from the ECB, as well as; (d) the consequences of possible changes in the economic policy of the united States in Europe and the ECB’s monetary policy”.
No comments:
Post a Comment