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4 Sep 2015
ECB: Super Mario’s dovish birthday present - ING
FXStreet (Delhi) – Carsten Brzeski, Chief Economist at ING, notes that the ECB chief Mario Draghi on his birthday gifted dovish birthday present to global financial markets as he sounded less upbeat about the Eurozone’s financial and economic health. In addition, he kept the door open for stepping up QE.
Key Quotes
“The ECB still expects a gradual recovery, albeit at a weaker pace. This was reflected in the latest ECB staff projection, which sees GDP growth of 1.4% this year (from 1.5% in the June projections), 1.7% in 2016 (from 1.9%) and 1.8% in 2017 (from 2.0%).”
“As regards inflation, ECB staff projections were revised downwards significantly on the back of lower energy prices. In the latest projections, ECB staff expects inflation to come in at 0.1% this year (from 0.3%), 1.1% in 2016 (from 1.5%) and 1.7% (from 1.8%).”
“Needless to say, the drop in inflation projections has revived the deflation versus disinflation debate within the ECB. It is the same debate the ECB had at the end of last year when discussing the need for QE.”
“All in all, on his birthday, Mario Draghi did not receive but actually gave a present to financial markets, stressing the ECB’s determination to do everything to support the Eurozone economy.”
Key Quotes
“The ECB still expects a gradual recovery, albeit at a weaker pace. This was reflected in the latest ECB staff projection, which sees GDP growth of 1.4% this year (from 1.5% in the June projections), 1.7% in 2016 (from 1.9%) and 1.8% in 2017 (from 2.0%).”
“As regards inflation, ECB staff projections were revised downwards significantly on the back of lower energy prices. In the latest projections, ECB staff expects inflation to come in at 0.1% this year (from 0.3%), 1.1% in 2016 (from 1.5%) and 1.7% (from 1.8%).”
“Needless to say, the drop in inflation projections has revived the deflation versus disinflation debate within the ECB. It is the same debate the ECB had at the end of last year when discussing the need for QE.”
“All in all, on his birthday, Mario Draghi did not receive but actually gave a present to financial markets, stressing the ECB’s determination to do everything to support the Eurozone economy.”