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5 Dec 2014
The scene is clearly set for QE in Eurozone - ING
FXStreet (Barcelona) - The ING Research Team notes that despite no action at yesterday’s ECB meeting, President Draghi sent strong signals that QE will start next year.
Key Quotes
“The ECB will discuss QE in the first quarter of next year. In our view, this will not yet take place in January as too little new information will be available by then. As regards to the balance sheet, we will get the second TLTRO on 11 December. Then, the run-off of the two earlier 3-year LTROs (accounting for roughly €280bn) could in the short run even reduce excess liquidity in the Eurozone.”
“Moreover, the March TLTRO will be the first one where the take-up depends on net lending and not the loan stock. Add to this the next staff projections and the ECB should have all information needed to go all the way. This makes us comfortable maintaining our current forecast of (an announcement of) a first intermediate QE in the first quarter, followed by sovereign QE in the second quarter, unless the Eurozone economy stages an unexpected growth revival.”
Key Quotes
“The ECB will discuss QE in the first quarter of next year. In our view, this will not yet take place in January as too little new information will be available by then. As regards to the balance sheet, we will get the second TLTRO on 11 December. Then, the run-off of the two earlier 3-year LTROs (accounting for roughly €280bn) could in the short run even reduce excess liquidity in the Eurozone.”
“Moreover, the March TLTRO will be the first one where the take-up depends on net lending and not the loan stock. Add to this the next staff projections and the ECB should have all information needed to go all the way. This makes us comfortable maintaining our current forecast of (an announcement of) a first intermediate QE in the first quarter, followed by sovereign QE in the second quarter, unless the Eurozone economy stages an unexpected growth revival.”