ECB: Preparing markets to announce a tapering – Nordea Markets

In view of Jan von Gerich, Research Analyst at Nordea Markets, recent signals suggest the ECB could announce the end of its asset purchases already this week, but such a move would not mean rate hikes around the corner.

Key Quotes

“New signals from the ECB, most importantly from Chief Economist Praet, suggest the ECB is close to pulling the plug on the asset purchase programme (in net terms).”

“The decision could come already this week, though we find July a slightly more likely timing.”

“We expect a tapering announcement to be packaged with dovish guidance on rates, and still expect the first rate hike only in December 2019.”

“Some of the hawkish market positions taken ahead of the tapering announcement are likely to be reversed after the fact.”