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Gaining Ground


Q1 US Earning Generally Ahead of Forecast


‌‌(H2)‌‌ Remains Vulnerable


90 Minute Call - BanRep Decision 1300ET / 1800GMT


Expiries for Jan31 NY cut 1000ET (Source DTCC)

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MNI (London)
     LONDON (MNI) - European Central Bank monetary policy will remain
accommodative despite the intended end of the asset purchase programme in
December, with interest rates remaining at current levels and the reinvestment
of maturing bonds continuing to offer support to the economy, MNI understands.
     Thursday's meeting saw the stand-off between the Governing Council's doves
and hawks come to a head, with President Mario Draghi finding a way to keep both
camps on side. The hawks, now seen as a larger group than just the usual
Northern bloc suspects, MNI believes, finally got an intended end-date for the
bond buying, while the doves got an extended period of rates at current levels.
     The doves had additional solace as Draghi again underlined that the policy
changes were still heavily dependent on the continued flow of improving
inflation data.
     Although the hawks were happy to see the announced end of the APP purely as
a policy measure, many on the Governing Council accepted that there would soon
be constraints on what could be purchased and, without another severe economic
downturn, it would be difficult to garner public support for moving into a fresh
asset class, MNI understands.
     And as many argued over recent months, the size of the monthly bond buys
over the final few months of the year were not important, making no material
difference to the overall size of the programme.
     MNI has heard on the Eurosystem network that the downsizing of the monthly
APP buys was fairly irrelevant and didn't change the overall picture of
accommodative policy. The move was "actually inconsequential to current monetary
policy goals."
     The move didn't in any way diminish the "extraordinary and prolonged
accommodative monetary stance of the ECB, which is boosted by the continued
reinvestment of maturing securities and the reassurance that rates will continue
to remain at current levels" for a prolonged period, certainly through the
summer of 2019, MNI has heard.
     Accordingly, it would follow from this thinking that the first rate hike
would not realistically be before early Q4 of 2019. That, as MNI noted on June
1, would put the first hike right up against the final meeting Mario Draghi
would preside over as President.
     And that is now likely to be the narrative that is pursued through
post-policy meeting press conferences for the best part of a year: Will Draghi
raise rates or leave it for his successor? 
--MNI London Bureau; tel: +44 203-586-2225; email:
--MNI London Bureau; tel: +44 203-586-2223; email:
[TOPICS: M$X$$$,MX$$$$,M$$EC$]
MNI London Bureau | +44 203-865-3812 |
MNI London Bureau | +44 203-865-3812 |
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