5 Dec 2014
ECB QE dicussions on hold but for how long? - ING
FXStreet (Guatemala) - Analyst’s at ING Bank N.V explained that the ECB will discuss QE in the first quarter of next year.
Key Quotes:
“In our view, this will not yet take place in January as too little new information will be available by then. As regards to the balance sheet, we will get the
second TLTRO on 11 December”.
“Then, the run-off of the two earlier 3-year LTROs (accounting for roughly €280bn) could in the short run even reduce excess liquidity in the Eurozone. Moreover, the March TLTRO will be the first one where the take-up depends on net lending and not the loan stock. Add to this the next staff projections and the ECB should have all information needed to go all the way”.
“This makes us comfortable maintaining our current forecast of (an announcement of) a first intermediate QE in the first quarter, followed by sovereign QE in the second quarter, unless the Eurozone economy stages an unexpected growth revival”.
“Obviously, not all ECB members, not even all members of the ECB’s Executive Board, are fully supportive on the role of the balance sheet in the ECB’s decision-making”.
“However, the continued emphasis of low inflation will make it very hard for even the purest Germanic monetarists to eventually block QE”.
Key Quotes:
“In our view, this will not yet take place in January as too little new information will be available by then. As regards to the balance sheet, we will get the
second TLTRO on 11 December”.
“Then, the run-off of the two earlier 3-year LTROs (accounting for roughly €280bn) could in the short run even reduce excess liquidity in the Eurozone. Moreover, the March TLTRO will be the first one where the take-up depends on net lending and not the loan stock. Add to this the next staff projections and the ECB should have all information needed to go all the way”.
“This makes us comfortable maintaining our current forecast of (an announcement of) a first intermediate QE in the first quarter, followed by sovereign QE in the second quarter, unless the Eurozone economy stages an unexpected growth revival”.
“Obviously, not all ECB members, not even all members of the ECB’s Executive Board, are fully supportive on the role of the balance sheet in the ECB’s decision-making”.
“However, the continued emphasis of low inflation will make it very hard for even the purest Germanic monetarists to eventually block QE”.