December 13, 2018

ECB ends QE with a dovish tilt and enhanced forward guidance on reinvestments

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In Short

At today’s Governing Council meeting, the ECB decided to terminate QE at the end of December while leaving the refi rate at zero and the deposit rate at -0.4%. The statement that key rates will not be altered at least through summer 2019 was maintained.
ECB ends QE with a dovish tilt and enhanced forward guidance on reinvestments
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Highlights:

  • As expected, the ECB announced to terminate QE at the end of December but committed itself to reinvest maturing securities for an extended period past the day it starts raising rates.
  • Also, the ECB maintained the commitment to leave key rates at the present level for at least through the summer of 2019.
  • While the growth outlook was revised down, the underlying strength of activity is still seen intact and risks remain still balanced in the eyes of the ECB.
  • Overall, the ECB maintained an easing bias and Draghi adopted a dovish tone in the Q&A session. We expect a first (depo) rate hike in December 2019.

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ECB ENDS QE WITH A DOVISH TILT AND ENHANCED FORWARD GUIDANCE ON REINVESTMENTS

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