ECB nervous about making any hawkish signals at the July meeting - SocGen

Reuters is the latest news outlet to suggest that ECB insiders are nervous about making any hawkish signals at the July meeting, notes Kit Juckes, Research Analyst at Societe Generale.

Key quotes

“We'll probably have to get used to this. The ECB would like to start the process of policy normalization, but wants as calm a market reaction as possible. I don't know what degree of calm they can hope for. In general, turning the corner and unwinding central bank asset purchases (to just the ECB's, where the talk is only of modest tapering, but the Fed's and the eventually the BOJs) is going to be like signalling a turn in a tectonic plate. So, hard to do without at least a minor tremor. A decision to do nothing and say little this month wouldn't be very significant. The PMI data and the bank lending figures both scream the case for starting a cautious withdrawal from bond-buying. It's just a question of time.”