ECB preview: Low on action but high on controversial debates and challenging questions - ING

According to Carsten Brzeski, chief economist at ING, the upcoming ECB meeting will probably be low on action but high on controversial debates and challenging questions.

Key Quotes

“With only few signs of a bottoming out of the recent loss of momentum, lingering “no deal” Brexit turbulence and hardly any inflationary pressure, calls on the ECB to get back into crisis mode are growing louder. In our view, however, there is still no need for the ECB to change its course. Instead, continuing the current strategy of driving on manual, with increased alertness, looks like the best plan for this week’s meeting.”

“For the time being and despite the loss of growth momentum, the ECB seems to follow the view that the eurozone economy is in an intermediate phase of slowing but not contracting. This means that the ECB will play for time, in our view.”

“The situation is not (yet) threatening enough for the ECB to return to crisis mode, nor is there a quick-win instrument left in the ECB’s toolbox. Consequently, we expect ECB President Mario Draghi to leave the ECB’s forward-guidance on rates unchanged, while at the same time, adding a dovish note by stressing the ECB’s data-dependency and downside risks to growth.”