In reaction to today’s European Central Bank (ECB) Monetary Policy Committee (MPC) meeting, Timothy Graf, head of macro strategy for EMEA at State Street Global Markets; and Antoine Lesné, head of EMEA strategy and research for SPDR ETFs, offer their views.
Graf comments, “Having offered significant and far-reaching policy guidance at its last meeting, the ECB had no need to rile languid summer markets. Though it is becoming clear Q1’s data disappointments were temporary and growth is still on a solid footing, inflation is a distance from its two percent target and the outlook for the eurozone is still somewhat clouded by the prospect of rising trade barriers. In that context, the caution shown around policy normalisation looks more than justified. Rate and FX markets will struggle to take much direction from what was a widely expected outcome.”
Lesné comments, “No major changes were expected this month. The downside risks to growth had been highlighted last month when the ECB announced the end of its asset purchases program. As core inflation prints for June were disappointing there may have been a reason to delay timing of the first hike, but summer 2019 is still well-anchored as underlying data such as wages suggest an acceleration of inflation. We do not expect any major market movements as a result and the euro may remain within its recent corridor versus the US dollar.”
