ECB: Stumbling towards the finish line – Rabobank

According to analysts at Rabobank, the ECB looks set to announce tapering this week and they believe that QE will be wound down in three steps of EUR 20bn, bringing purchases to zero in 2018H2.

Key Quotes

“A few other scenarios are realistic alternatives, and we expect the market impact to be broadly similar across all options we consider feasible.”

“That said, we admit that our scenario is on the more hawkish side of the tapering spectrum. If the ECB opts for such an exit, this could lead to a negative market reaction in the short-run.”

“However, we would argue that ultimately the flexibility given by this approach could actually help stabilising yields in the long run (and so limit sharp movements).”