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ECJ due to hold hearing on ECB's OMT program today - Deutsche Bank

FXStreet (Łódź) - Jim Reid, Head of Global Fundamental Credit Strategy at Deutsche Bank suggests that today's European Court of Justice hearing on the ECB’s OMT programme is an important one as it will shape the central bank's legal ability to bring in future QE.

Key quotes

"Looking ahead to today, the European Court of Justice (ECJ) will hold a hearing on the ECB’s OMT programme. This comes after the German Constitutional Court in February passed the case against the OMT (along with a list of specific questions on legality) onto the ECJ thus pausing their own proceedings."

"As our European economics team wrote in this past week’s Focus Europe, the hearing will be 'an official exchange of views between the plaintiffs and the ECB. Neither the statements nor the hearing will be public.'"

"Whilst the hearing will be held today, in terms of a time frame for an answer our economics team noted that, 'there will be no judgement, and similar proceedings have taken up to 15 months on average in the past,' although the actual time frame for this case could be significantly different."

"This case is important as it will affect the legal ability of the ECB to bring in future QE."

"Looking ahead our economists expect that, “it is quite likely that the ECJ and subsequently the GCC will come to a favourable ruling on the subject of OMT."

"However, proceedings and timeline are still unclear. They expect economic conditions to force the ECB into public QE within the next 6 months."

"However the market perception of the efficacy and durability of the public QE may be weakened if the final judgement on OMT is still outstanding."

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