ECB: Announcement of an extension of the APP for 2018 anticipated - Westpac

Analysts at Westpac suggest that today all eyes remain on the ECB Governing Council as they near the end of their current asset purchase program, which is due to expire in December.

Key Quotes

“At the October meeting, some formal announcement of an extension of the program for 2018 is anticipated. Whether all the detail is made available remains an open question.”

“To our mind, the most logical program structure would be to taper from €60bn to €40bn in the first half of 2018, then to €20bn in the second six months. That would allow a smooth transition to a flat balance sheet come 2019. The alternative would be a circa €30bn pace through the entire year. Either way, some €360bn in additional liquidity would be provided to markets and the economy during 2018. Interest rates will remain unchanged in 2018 and early 2019.”