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4 Dec 2014
ECB says much about doing nothing – BBH
FXStreet (Barcelona) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman, highlights the key points out of today’s ECB meet, while noting that ECB stands ready to do more next year.
Key Quotes
“The ECB has not announced any new initiative. It stands ready to do more next year, but there was no specific mention of sovereign bond purchases. There was no tweaking of the second TLTRO which will launched next week. The staff did cut the forecasts for growth and inflation, but Draghi acknowledged that the forecasts do not incorporate recent drop in energy prices.”
“The sense of urgency that Draghi (and Constancio) had appeared to express in recent speeches did not seem to be reflected in the press conference. This help spur a short-covering bounce in the euro that took the single currency back to yesterday's highs. After initially falling to $1.2280, the euro bounced more than a cent. Many participants had expected something more, including a commitment on sovereign bonds.“
“The staff cut the inflation forecast for next year to 0.7% from 1.1%. The forecasts for 2016 was pared to 1.3% from 1.4%. The GDP forecast for 2015 was cut to 1% from 1.6%, and in 2016 from 1.9% to 1.5%.”
“To the extent that there is something new today it may lie with how Draghi characterized the expansion of the balance sheet to early 2012 levels as an intention. He said this is more than "expectation" which was the term used last month, but not to the level of a "target."”
Key Quotes
“The ECB has not announced any new initiative. It stands ready to do more next year, but there was no specific mention of sovereign bond purchases. There was no tweaking of the second TLTRO which will launched next week. The staff did cut the forecasts for growth and inflation, but Draghi acknowledged that the forecasts do not incorporate recent drop in energy prices.”
“The sense of urgency that Draghi (and Constancio) had appeared to express in recent speeches did not seem to be reflected in the press conference. This help spur a short-covering bounce in the euro that took the single currency back to yesterday's highs. After initially falling to $1.2280, the euro bounced more than a cent. Many participants had expected something more, including a commitment on sovereign bonds.“
“The staff cut the inflation forecast for next year to 0.7% from 1.1%. The forecasts for 2016 was pared to 1.3% from 1.4%. The GDP forecast for 2015 was cut to 1% from 1.6%, and in 2016 from 1.9% to 1.5%.”
“To the extent that there is something new today it may lie with how Draghi characterized the expansion of the balance sheet to early 2012 levels as an intention. He said this is more than "expectation" which was the term used last month, but not to the level of a "target."”