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7 Mar 2014
Flash: - The bottom line message - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank noted that the ECB kept policy unchanged today, in line with their expectations. They suggested that the bottom-line message was that the ECB ‘truly’ believes that inflation will gradually revert back to its policy target level of “below but close to 2%”".
Key Quotes:
"The by now familiar opening statement contained a repeat of the forward guidance policy and the ECB’s readiness to take further action if required. But from Draghi’s comments that followed it was pretty clear that the ECB felt that recent data releases and the fresh set of economic projections by the ECB’s staff have buttressed last month’s decision not to act".
"Draghi sounded less dovish than the market had expected (and even we were somewhat surprised by the tone ourselves). The Eurodollar rose one big figure to 1.3840 in the aftermath of the press conference, whilst the 3m forward on 3m Euribor jumped 2-3bps higher".
"The ECB continues to see a gradual economic recovery that is proceeding “in line with its previous assessment”".
"GDP growth for 2014 was revised up slightly to 1.2% by the ECB staff. Economic growth is then seen to accelerate towards 1.5% in 2015 and 1.8% in 2016 (similar to EC projections released last week)".
"More importantly, inflation for 2014 was revised down by -0.1% to 1% in 2014, but expected to accelerate towards 1.3% in 2015 and 1.5% in 2016. Draghi specifically mentioned that inflation was seen reaching 1.7% by the final quarter of 2016, just to emphasize the “positive momentum.”"
"So, the bottom-line message here is that the ECB ‘truly’ believes that inflation will gradually revert back to its policy target level of “below but close to 2%”".
Key Quotes:
"The by now familiar opening statement contained a repeat of the forward guidance policy and the ECB’s readiness to take further action if required. But from Draghi’s comments that followed it was pretty clear that the ECB felt that recent data releases and the fresh set of economic projections by the ECB’s staff have buttressed last month’s decision not to act".
"Draghi sounded less dovish than the market had expected (and even we were somewhat surprised by the tone ourselves). The Eurodollar rose one big figure to 1.3840 in the aftermath of the press conference, whilst the 3m forward on 3m Euribor jumped 2-3bps higher".
"The ECB continues to see a gradual economic recovery that is proceeding “in line with its previous assessment”".
"GDP growth for 2014 was revised up slightly to 1.2% by the ECB staff. Economic growth is then seen to accelerate towards 1.5% in 2015 and 1.8% in 2016 (similar to EC projections released last week)".
"More importantly, inflation for 2014 was revised down by -0.1% to 1% in 2014, but expected to accelerate towards 1.3% in 2015 and 1.5% in 2016. Draghi specifically mentioned that inflation was seen reaching 1.7% by the final quarter of 2016, just to emphasize the “positive momentum.”"
"So, the bottom-line message here is that the ECB ‘truly’ believes that inflation will gradually revert back to its policy target level of “below but close to 2%”".