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10 Dec 2015
Contrasting opinions at the ECB - ING
FXStreet (Guatemala) - Analysts at ING explained that after weeks of speculation that major additional monetary stimulus might be in the offing, the risk of disappointment had increased ahead of the December ECB meeting.
Key Quotes:
"Indeed, financial markets had priced in at least a 15bp cut of the deposit facility rate by the ECB and a stepping up of monthly asset purchases by €10bn. Instead, the markets only got a 10bp deposit rate cut and the lengthening of the Asset Purchase Programme until March 2017.
Small wonder that the euro shot up by 3%, 10yr bond yields increased by 20bp and stock markets fell following the ECB decision. Central bankers would call this an “own goal”.
The outcome of the meeting of the Governing Council clearly reflects the contrasting views on the economic developments. On the one hand, the economy seems to be holding up well despite some headwinds such as the slowdown in emerging markets, Volkswagen scandal and recent terrorist attacks and threats.
Indeed, the last confidence figures even show some improvement, with the German Ifo-indicator picking up in November, suggesting stronger growth momentum in the fourth quarter.
This also seems to be true for the Eurozone as a whole, with the PMI indicator surprisingly strong last month. It is encouraging that the leading indicators in the survey, such as the new orders indicator and hiring intentions, are at their highest level since 2011. Only in France, the PMI indicator showed some weakness on the back of the terrorist attacks in Paris."
Key Quotes:
"Indeed, financial markets had priced in at least a 15bp cut of the deposit facility rate by the ECB and a stepping up of monthly asset purchases by €10bn. Instead, the markets only got a 10bp deposit rate cut and the lengthening of the Asset Purchase Programme until March 2017.
Small wonder that the euro shot up by 3%, 10yr bond yields increased by 20bp and stock markets fell following the ECB decision. Central bankers would call this an “own goal”.
The outcome of the meeting of the Governing Council clearly reflects the contrasting views on the economic developments. On the one hand, the economy seems to be holding up well despite some headwinds such as the slowdown in emerging markets, Volkswagen scandal and recent terrorist attacks and threats.
Indeed, the last confidence figures even show some improvement, with the German Ifo-indicator picking up in November, suggesting stronger growth momentum in the fourth quarter.
This also seems to be true for the Eurozone as a whole, with the PMI indicator surprisingly strong last month. It is encouraging that the leading indicators in the survey, such as the new orders indicator and hiring intentions, are at their highest level since 2011. Only in France, the PMI indicator showed some weakness on the back of the terrorist attacks in Paris."