GS ON ECB

Goldman Sachs' take on yesterday's ECB meeting:

• The limited revisions to the staff macroeconomic projections shows that the baseline outlook remains largely intact.
• President Lagarde indicated little urgency to provide additional monetary accommodation, including through an increase in the PEPP envelope.
• Given that Lagarde offered no details on the policy implications of a stronger euro suggests that the bar for policy rate cuts to counter currency strength is high.
• GS continue to expect that substantial asset purchases will be required beyond the current PEPP envelope given low inflation and increasing bond supply. The base case sees the APP stepped up as the PEPP ends in mid-2021