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Scope, pace ECB balance sheet expansion awaited - RBS

FXStreet (Bali) - RBS shares their thoughts on the upcoming ECB policy meeting, noting that markets will be keen on knowing the scope and pace of balance sheet expansion.

Key Quotes

"ECB President Draghi announced an ABS / Covered Bond purchase program in September but promised “the detailed modalities of these programs will be announced after the Governing Council meeting” in October."

"Markets will be keen on knowing the scope (how much), and pace (when) of balance sheet expansion. After having referenced a target for the balance sheet, the ECB is now under pressure to deliver on that target. If the ECB’s purchase program modailties and tLTRO suggest it is not on pace to reach that target, additional easing action would become a more realistic possibility as soon as December."

"President Draghi will likely also be questioned about the disappointing take-down of the first tLTRO, and how that impacts expectations for QE. The data calendar also contains September PMIs and the flash estimate for September CPI as well. Any weakness in CPI from current low levels should keep the pressure on the ECB’s inflation dilemma and it’s subsequent policy response."

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