ECB’s Draghi deliberately vague - Fidelity

Dierk Brandenburg, Senior Sovereign Analyst at Fidelity International, suggests that at yesterday’s meeting, the ECB decided to postpone the inevitable and all elements of the of the stimulus programme were left unchanged with only marginal downward revisions to GDP and inflation forecasts.

Key Quotes

“Crucially, Draghi was intentionally vague about any revision to the PSPP framework. With inflation that will undershoot the ECB target for the foreseeable future, policy easing is set to continue and the ECB is avoiding the scarcity issue for risk free assets that will soon start to bite. While a rate cut further into negative territory was left on the cards, we hope that this can be avoided in view of the negative effect on the financial sector.”