analyse FRA BNP Paribas:
Eurozone: ECB emphasises its intention for full implementation of asset purchases At a rather eventful press conference yesterday, the most important message from the ECB was that the central bank is focused on a “full implementation” of its monetary-policy measures until a sustained increase in inflation is attained. The fact that this came amid the ECB’s more positive assessment on growth prospects – and surrounding risks – makes this statement even more powerful. In response to the improvement in economic conditions, some recent comments from Governing Council members, and question marks over scarcity of assets, there has been growing speculation that the ECB might scale down the run-rate of the extended asset-purchase programme.
While the speculation is unlikely to go away, partly reflecting a more positive economic outlook, the ECB’s priority remains to implement fully the policy measures already announced against a backdrop of very low inflation and doubts about how quickly it will rise. Its objective is to bring inflation back to target, by looking through developments it considers to be transitory and focusing on the underlying trend. As for the scarcity of assets, the message from the ECB was that such questions are premature. While he stated that there is some flexibility to adjust the parameters of the programme in future, when pressed as to what form this might take, President Mario Draghi was not drawn on the possibilities. He did, however, provide a clear response to a question about whether the ECB is thinking about lowering the deposit rate to help alleviate the problem of scarcity: the answer, categorically, was “no”.
