The euro is slipping back from its highest levels against the dollar since May 2016 ahead of Thursday’s monetary policy, when investors will be on close watch for any signs about Mr Draghi’s thinking on the timing of policy normalisation.
The shared currency is down 0.2 per cent at $1.1528, while the dollar finds broader support after its sharp slide on Tuesday, when the White House’s failure to enact healthcare legislation undermined faith in the Trump administration’s ability to pass plans for tax cuts and fiscal stimulus into law.
ECB board members are openly debating monetary policy normalisation, and the July 20 meeting will be critical in providing forward guidance.
Mario Draghi has made it clear that he is serious about tapering asset purchases. . . We expect that Mr Draghi will repeat his message on policy, even if he simply takes the opportunity to announce what he intends to do in September. We share the consensus view that tapering will begin early next year, with the first deposit rate hike thereafter. Throughout, Mr Draghi will emphasize three words: 'gradual', 'slow' and cautious ".
The ECB is now in the spotlight after Mario Draghi indicated that maintaining current levels of QE would now be considered too accommodative given the strength of Eurozone data. While we do not expect a change to interest rates in the euro area announced really until after the monthly purchase amount is reduced to zero, we may start getting hints from Draghi about the time line of these changes in the coming meetings. It is more likely timing will be at a later meeting this year.
The Bank of Japan is still pulling out all the stops to try to raise inflation. For now, despite very low unemployment and improved confidence, inflation remains well below their 2% target, suggesting that they need to continue to do what they can to push growth and inflation upward. . It is therefore no surprise that market pricing suggests we will not see an end to the negative rate policy until at least 2020. For Thursday’s meeting, we do not expect any monetary policy change.
The shared currency is down 0.2 per cent at $1.1528, while the dollar finds broader support after its sharp slide on Tuesday, when the White House’s failure to enact healthcare legislation undermined faith in the Trump administration’s ability to pass plans for tax cuts and fiscal stimulus into law.
ECB board members are openly debating monetary policy normalisation, and the July 20 meeting will be critical in providing forward guidance.
Mario Draghi has made it clear that he is serious about tapering asset purchases. . . We expect that Mr Draghi will repeat his message on policy, even if he simply takes the opportunity to announce what he intends to do in September. We share the consensus view that tapering will begin early next year, with the first deposit rate hike thereafter. Throughout, Mr Draghi will emphasize three words: 'gradual', 'slow' and cautious ".
The ECB is now in the spotlight after Mario Draghi indicated that maintaining current levels of QE would now be considered too accommodative given the strength of Eurozone data. While we do not expect a change to interest rates in the euro area announced really until after the monthly purchase amount is reduced to zero, we may start getting hints from Draghi about the time line of these changes in the coming meetings. It is more likely timing will be at a later meeting this year.
The Bank of Japan is still pulling out all the stops to try to raise inflation. For now, despite very low unemployment and improved confidence, inflation remains well below their 2% target, suggesting that they need to continue to do what they can to push growth and inflation upward. . It is therefore no surprise that market pricing suggests we will not see an end to the negative rate policy until at least 2020. For Thursday’s meeting, we do not expect any monetary policy change.
