ECB: Shifting ground - BNPP

According to Luigi Speranza, Head of European Market Economics at BNP Paribas, recent data challenge the ECB’s view that risks remain to the downside and that substantial monetary accommodation is still needed for inflation to return sustainably to trend.

Key Quotes

“Against this backdrop, we expect the ECB to tweak its risk assessment at its meeting on 9 March, suggesting that risks ‘have receded’ or have become ‘more balanced’.”

“We expect little or no change to the monetary policy outlook, however. The ECB should stick to its commitment to buy EUR 60bn worth of assets until at least December 2017.”

“Changes to the forward guidance are possible, however. The ECB has currently a bias for more accommodation through lower rates and/or more QE. This bias could be removed.”