ECB acknowledges shift of risks to the downside but is still in ‘assessment mode’

At today’s Governing Council meeting, the ECB did not change its policy stance. The statement that key rates will not be altered at least through summer 2019 was maintained. The focus was on whether the ECB would basically stick to its normalization stance against the backdrop of disappointing activity data and ongoing uncertainty from various risks.

Highlights:

  • At today’s meeting, the ECB did not adjust its commitment to leave key rates at the present level for at least through the summer of 2019.
  • In light of the latest disappointing macroeconomic news flow, the Governing Council now unanimously sees risks tilted to the downside but differs on whether the growth slowdown is persistent.
  • The ECB is still in assessment mode and will discuss policy implication at the March meeting.
  • We see an increased risk that the ECB will postpone the timing of its first (depo) rate hike into 2020.

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ECB ACKNOWLEDGES SHIFT OF RISKS TO THE DOWNSIDE BUT IS STILL IN ‘ASSESSMENT MODE’

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