On Dec 8th – ECB Conference to decide “Interest Rate Change”?

ECB monetary policy decision. What to expect?

12:45 GMT

ECB policy meeting

Consensus: -0.40% deposit rate

Previous: -0.40% deposit rate

13:30 GMT

ECB President Mario Draghi holds a press conference after the rate decision

At the latest policy meeting, the Bank remained on hold and gave no hints with regards to the likelihood for further easing. In the press conference following that decision, President Draghi said that the ECB will be clear about what it will do in the coming months at the December gathering.

Considering the recent string of optimistic data from the Eurozone, and the fact that the bloc’s 5y/5y inflation expectations have been rising steadily since September, we do not expect the ECB to introduce any fresh easing measures at this gathering.

Nevertheless, we do expect the Bank to extend the minimum duration of its existing QE program, as well as tweak the parameters of QE regarding what the ECB can buy, so the Bank doesn’t run out of eligible assets to purchase before the program ends.

Our view is based on the fact that the Governing Council has signaled repeatedly that QE will run as long as necessary, at least until there is a sustained adjustment in the path of inflation, something not evident yet.