ECB remains on ‘auto-pilot’ – UOB

Lee Sue Ann, Economist at UOB Group, gives her opinion on the recent ECB event.

Key Quotes

“The ECB has essentially placed itself on an auto pilot mode. At this juncture, the exact timing of the rates lift-off next year and the intricacies of the reinvestment strategy is hard to predict; but growth and inflation backdrops will continue to remain as key considerations behind the ECB’s decision-making process”.

“We see the deposit rate at 0% and the refi rate at 0.25% by the end of next year. Beyond that, the ECB will tread even more cautiously in tightening monetary policy”.

“There is also speculation that when Draghi’s term as ECB President ends in October 2019, Bundesbank President Jens Weidmann (who is a long-time critic of the ECB’s ultra-loose policies) could push for a faster pace of policy normalization”.