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MNI: REFILE FROM MONDAY: POV. ECB STAFF TO PROVIDE 2020 VISION
- Thursday's ECB meeting will have attention upon the new Staff forecasts, which
will include 2020 for the first time. There should also be further details on
the APP. Also expect clarity on what the ECB might do in light of a potential
bond default following large Steinhoff bond/equity volatility.
- MNI does not make forecasts but the general theme of growth
continuing/inflation accelerating should be evident in 2020. Furthermore the way
general equilibrium models work, the ECB Staff are unlikely to forecast GDP
anything much away from trend growth as far out as 2020.
- For HICP, 'job done' for the ECB is when the forecast is 1.8/1.9%. From 2003,
the ECB defined price stability as "below, but close to, 2% over the medium
term". The 2019 forecast is currently 1.5% and 2020 HICP at 1.8% is achievable.
- A 1.8%/1.9% HICP forecast for 2020 presents a threat to low Schatz yields.
- The ECB will also hopefully tell details of its plans to keep a strong
presence in the corporate bond buying programme in the new year. Perhaps, the
size of the programme won't even be cut.