Westpac - ECB Policy Meeting Preview

Research Team at Westpac, suggests that the ECB could not have been clearer in its recent communications: come December, the Governing Council will provide further accommodation to the Euro Area.

  1. The availability and cost of credit has improved markedly and labour markets across the region have begun to heal but there is still much progress to be made. 
  2. Unemployment is high: core inflation well below target 
  3. Real GDP growth modest.
  4. A deposit rate cut at the December meeting seems an almost certain outcome. 

What remains up for debate is whether the asset purchase program will be expanded (by asset type and/or scale) or simply extended in duration.

Our expectation is the latter, with the ECB pushing out the end date of the program into 2017, while keeping the other parameters unchanged.
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