ECB: No fireworks this time – TDS

Analysts at TD Securities note that the ECB left its policy levers and forward guidance unchanged yesterday, in line with expectations with Draghi's final press conference taking place without much fanfare, as the tone was little changed from September and there were no hints at all about future policy.

Key Quotes

“Overall it was a fairly quiet event, and he has now handed the reins over to Lagarde without tying her hands.”

“One interesting tweak in the opening statement was a bit more of a nod to headline inflation, compared to focusing more on underlying inflation in recent years. Draghi reiterated the need for an accommodative stance "to support underlying inflation pressures and headline inflation developments over the medium term," where we think the word headline was especially deliberate.”

“Outside of that, there was perhaps a bit more concern about growth, with Draghi noting that everything that has happened since the September meeting shows that the Governing Council was justified in its determination to act.”

“The policy baton now gets passed to Ms Lagarde, who attended today's Governing Council meeting but didn't participate in the deliberations. If the Eurozone downturn worsens, which we think is likely, she's going to have her work cut out for her in getting the Governing Council on board to deliver further stimulus.”

“Draghi did set up yesterday for further GDP growth downgrades at the December meeting, which we believe will be met with further rate cuts in December and March. The ECB under Ms Lagarde will continue the battle against continuously low inflation.”