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Draghi and Constancio gauges the ECB prospects in the near term – Danske Bank

FXStreet (Edinburgh) - Senior Analyst at Danske Bank Sverre Holbek reviewed the recent appreciations by ECB’s Draghi and Constancio.

Key Quotes

“ECB Vice President Constancio and President Draghi shed further light on thinking within the governing council yesterday”.

“Particularly Constancio was quite open in an interview with Börsen Zeitung. He said that while there was no proposal on the table to start buying government bonds and the ECB would prefer not to do so, it ‘certainly is something we cannot exclude’”.

“Constancio declined to give a target for the recently announced asset purchasing programmes and said that the ECB does not intend to do so at the next meeting either”.

“With rates at what Constancio referred to as the lower zero bound, monetary policy has shifted focus to the size of the ECB’s balance sheet”.

“In that regard, Constancio highlighted the attractiveness of the TLTROs, advising banks not to miss the opportunity”.

“In a prepared speech, Draghi elaborated further on the views presented at Jackson Hole in August, urging governments to boost investment efforts if they can afford it, while staying in compliance with existing budget rules”.

“He also said that governments should offer guarantees to encourage lending to small businesses, and support ABSs”.

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