ECB monetary policy accounts preview – RBS

FXStreet (Barcelona) - Trading Strategists at RBS comment on the expectations from today’s release of ECB monetary policy minutes.

Key Quotes

“The ECB releases accounts of its early March monetary policy meeting .This meeting took place prior to the March 9th start to the ECB’s public sector asset purchases and the ECB revealed many of the underlying details of the public sector purchase program following the March decision. As a result, the accounts may provide a look at what proposals were considered as the Bank finalized the modality of the purchases that were announced in January.”

“In particular, we expect the discussion of the limitations of the ECB’s available purchases, including the threshold of not purchasing any assets with yields below the deposit rate and the 25% cap on ownership of an individual issue, to be insightful.”

“Our Rates Research team felt the January accounts revealed that the 25% cap was less rigid than assumed. The flexibility or inflexibility of these self-imposed limits are key, as a change in these thresholds may be required if the ECB were to ultimately step up the pace or magnitude of its public sector QE program.”

“We feel the persistence of the ECB’s balance sheet expansion and negative carry should weigh on the EUR.”

“The ECB upgraded its assessment of the economic outlook marginally in March, noting that downside risks to the outlook remain, but have diminished.”