Mario Draghi marks his birthday by cutting the ECB’s growth and inflation forecasts, and suggesting more QE could be needed
- Summary: ECB cuts forecasts as storm clouds gather
- ECB may extend QE soon
- Press conference highlights start here
- Lunchtime summary: Markets bounce back
4.48pm BST
Investec have sent over a handy explanation of the tweaks that the ECB is making to its asset purchase plan (announced early in today’s press conference):
The change will see the Public Sector Purchase Programme issue share limit raised from 25% to 33%, except where the Eurosystem would have a blocking minority.
This change appears to be aimed at reinforcing views that the ECB maintained full control over its purchases and could work easily around market impediments; indeed Mr Draghi said it was meant to ensure the continued smooth functioning of the programme.
4.21pm BST
Ranko Berich, Head of Market Analysis at Monex Europe, reckons the European Central Bank will set sail on QE2 soon, following today’s “unambiguously dovish” press conference:
“Draghi presented a double-whammy of pessimism, with additional downside risks from recent market volatility adding to the already downgraded growth and inflation forecasts.”
Should we see the very real risks of free-falling commodity prices and a weakened growth outlook begin to weigh down on inflation prospects, Draghi has shown his intention to act by altering the duration, composition, or size of QE.
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Source: The Guardian Circular Economy RSS