When he steps down as ECB President at the end of October, Mario Draghi should become a postman, because he always delivers! In today’s ECB monetary policy statement, a swathe of easing measures has been announced. Markets have been anticipating these measures, but looking at the market reaction, it seems that the ECB has not disappointed. QE to infinity it seems.
The measures announced
We see this as an impressive announcement of dovish measures, with Draghi living up to his “whatever it takes” reputation. Howveer, it is a move that also is a nod to try and appease as many on the Governing Council as possible. The hawks will have fought for no QE, but in the event a lower amount than perhaps it could have been. The “as long as necessary” is smart as it means that if the Eurozone economy picks up then this can easily be halted. Cutting the deposit rate was a given, but the teiring was also necessary for the still ailing banking sector in the region.
The reaction has been fairly dovish, with Bund yields lower, euro lower and equities higher.
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