ECB: No Appetite for More Stimulus, but Forced to Leave Door Open - Rabobank
According to analysts from Rabobank, the European Central Bank showed
confidence in its policy measures and the Governing Council has no
strong appetite to ramp up policy in the foreseeable future.
Key Quotes:
“Broadly
speaking, then, the key message of today’s press conference was that
the ECB still has confidence in its policy measures, but with an
undertone in that message that was actually not that forceful. This also
explains why, talking about the future policy stance, the ECB President
repeated that, if needed, the Governing Council will use all
instruments within its mandate to support the return of inflation
towards its objective and it will continue to monitor that outlook
closely.”
“Altogether, we believe that today’s press
conference backs our view that the Governing Council has no strong
appetite to ramp up policy in the foreseeable future. But it also recognizes that it cannot afford to close to door on possible further easing measures beyond that horizon.”
“As
mentioned above, the GC did not set a monthly target for corporate bond
purchases. The ECB has probably done this to retain sufficient
flexibility to buy more/less corporate debt depending on the
circumstances. Interestingly, though, the ECB did set a very high issue
limit: up to 70% of the outstanding amount per ISIN can be purchased.
This limit can be lower in some circumstances, e.g. for securities
issued by public undertakings (i.e. entities in the quasi-government
sector).”
“Our key takeaway from these modalities is that the ECB
has tried to cast the net as wide as possible, also in view of possible
scarcity issues that it may encounter. Moreover, given that the private
sector is less prone to ‘monetary financing’ concerns than the public
sector, this has also allowed the ECB to do so.”