June 19, 2019

Draghi hints at ECB policy reversal in his Sintra spreech

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In Short

Following a very dovish June press conference, ECB President Draghi hinted at today’s Sintra speech at new easing measures. Draghi has made clear that additional stimulus measures – potentially including all instruments - would be necessary unless the outlook improves.
Draghi hints at ECB policy reversal in his Sintra spreech
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Highlights:

  • Following a very dovish June press conference, ECB President Draghi hinted at today’s Sintra speech at new easing measures.
  • Draghi has made clear that additional stimulus measures – potentially including all instruments – would be necessary unless the outlook improves.
  • Other ECB speakers have made rather clear this week that the recent collapse in inflation breakevens is seen as intolerable.
  • We now expect further ECB monetary policy action in September, if not earlier.
  • The size of the easing package is uncertain, and may depend on exogenous factors (trade tensions, Brexit, Italy). Given the risks associated to the de-anchoring of inflation expectations, a light-hearted approach is unlikely.
  • Below we discuss and rank the available easing tools.

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DRAGHI HINTS AT ECB POLICY REVERSAL IN HIS SINTRA SPREECH

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