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23.05.2019 21:44

ECB's April monetary policy account: Weaker confidence, growing worries – Nordea Markets

Jan von Gerich, an analyst at Nordea Markets, suggests that the ECB’s April monetary policy account implies that the bank needs more data to guide its future monetary policy steps.

  • Despite the weakened outlook, entirely new easing measures are not on the table, as the ECB concentrates on forward guidance and the TLTROs.

  1. The ECB is not close to announcing new monetary policy measures
  2. Confidence towards the baseline economic scenario within the ECB weakened
  3. Worries about lower inflation expectations on the increase
  4. Governing Council far from united on the side effects of negative rates and the TLTRO terms – more data needed

  • The April monetary policy account did not include major new signals or hints about where monetary policy is heading. There was a lot of discussion on the economy and the uncertain outlook, with some Governing Council members were more worried than others.
  • The ECB’s baseline remains that while the manufacturing sector has taken a hit, the services sector continues to do better and the soft patch the economy is experiencing will turn out to be only temporary.
  • The incoming economic data have not been all bad since the April meeting. Q1 GDP numbers surprised to the upside as did April inflation, while the recent PMIs raise new worries. Against this background, the ECB is probably not feeling an immediate need to act. While we expect another extension of forward guidance and relatively easy terms for the targeted longer-term refinancing operations (TLTROs) to be announced in June, further important data releases, such as the May inflation number on 4 Jun, will be out before the meeting and will impact the decision.


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