ECB: Cautiously optimistic and steady course – Danske Bank

As expected, the European Central Bank left its monetary policy stance unchanged on Thursday. Analysts at Danske Bank argue that in line with their expectations, the tiering multiplier discussion did not take place. They see no change in ECB policy in the near-term. 

Key Quotes: 

“In what was otherwise an uneventful meeting, Lagarde said that the ECB estimated that measures taken from March to June (i.e. the COVID-19 monetary policy responses) have resulted in a cumulative impact of 1.3% on real GDP growth until 2022 and 0.8% inflation until 2022.”

“ECB meetings in July have notoriously been relatively uneventful (except in 2012).”

“Is the EUR1350bn PEPP a ceiling, as board member Isabel Schnabel has said? Her clear answer was that unless there were significant upside surprises, which they do not see for the moment, the baseline is to use the full envelope.”

“Was changing tiering multiplier discussed? No”

“Lagarde praising the success of the liquidity operations (TLTRO) several times and the cautiously optimistic assessment cause us to conclude that ECB stimuli or changing the modalities of its instruments are not on the table in the near term.”