ECB: And here comes the taper – Nordea Markets

Jan von Gerich, Global Fixed Income Strategist for Nordea Markets, points out that the ECB set an end date for its net asset purchases today, and confirmed rates will remain at current levels at least through the summer of 2019.

Key Quotes

“We still think the first rate hike is distant, but await more information at 14:30 CET.”

“An era is ending, as today it was the ECB’s turn to announce that the end to its net asset purchases is in sight. More specifically, the ECB intends to end net purchases by the end of the year after net purchases of EUR 15bn per month between October and December.”

“The ECB also strengthened its forward guidance, which now states the Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path.”

“We do not think that the inflation outlook has changed sufficiently to warrant quick rate hikes, and find the new guidance to be in line with our expectation of the first 25bp rate hike taking place only in December 2019.”

“More information will be available at the press conference starting at 14:30 CET.”