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-- Focus on mid-year slowdown, protectionist fears
By Luke Heighton
     LONDON (MNI) - Investors will look for more insight into European Central
Bank thinking on the threat of protectionism and a mid-year slowdown in German
economic data when it releases minutes of its July meeting on Thursday, but
further details of plans for winding down quantitative easing and tightening
policy may have to wait until September's gathering.
     Below are key points to watch for, with the ECB making clear that
significant monetary stimulus is still required:
     -- How much did discussion focus on weakening data? While ECB staff
macroeconomic projections remain consistent with the objective of medium-term
inflation below but close to 2%, June saw German factory orders fall 4.4% on the
previous month, while capital and consumer goods orders slumped by 4.7% and 4.5%
respectively. At his July press conference, the central bank's president Mario
Draghi attributed a pull-back in growth from "very high" levels in 2017 mainly
to weaker trade impetus.
     -- To what extent are global trade tensions and deepening emerging-market
turmoil weighing on the ECB's deliberations? An upsurge in protectionism could
seriously impact confidence, and especially business investment, according to
Draghi, but he stressed that more analysis of its effects would be impossible
until it was clear precisely what trade measures might be implemented around the
     -- The bank has said it intends to keep interest rates on hold until "at
least until the summer of 2019", but any discussion on how this phrase,
originating in June's announcement, should be interpreted would be of maximum
     -- It would be a surprise to see more on a crucial point: the ECB's plans
for reinvesting its maturing bonds. On this Draghi was clear: any plans remain
anchored to the capital key, although the council had not yet not discussed
anything about reinvestment policy. "We haven't discussed even when to discuss
it," he told reporters.
     -- Italy was only mentioned briefly in the press conference, and it would
be a surprise were it to have featured heavily in the discussions beforehand.
Draghi responded at length to a question from MNI about Greece, and it is
possible it could feature in the minutes, given the proximity of Athens' August
21st bailout exit, and the end of the waiver program that had allowed Greek
banks to use government bonds as collateral for ECB loans.
--MNI Frankfurt Bureau; +49-69-720-146; email:
[TOPICS: M$X$$$,M$$EC$]