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