ECB: Today’s meeting will quickly disappear from memories - ING

Today, as expected, the European Central Bank kept interest rates and the massive purchase program unchanged. Carsten Brzeski, Chief Economist at ING, explains that today’s meeting had nothing new but the mention of the Brexit downside risks.

Key Quotes:

“All ECB watchers who had booked a July vacation had clearly taken a wise decision: today’s ECB meeting did not deliver any new insights on the future path of the ECB’s monetary policy. ”

“The meeting actually came both too late and too early for the ECB to act in response to the Brexit vote. It came too late to counteract any market turbulence, as markets have calmed down since the vote, but it also came too early for the ECB to have any idea on the direct economic impact from Brexit on the Eurozone economy.”

“Draghi’s introductory words were almost a verbatim copy from the June meeting, the only difference being that the Brexit vote was a downside risk which had since become a reality.”

“Draghi dodged all questions that sought potential hints on future action. According to Draghi, the ECB had not discussed the issue of bond scarcity, neither had it discussed new stimulus. Probably knowing that this message could disappoint markets, Draghi tried to sound at least a bit more dovish by summarizing the ECB’s stance as “ready, willing, able to act if needed”. What sounds like a strong message was just a repetition from previous press meetings.”

“All in all, today’s meeting was one that will quickly disappear from memories. More action in September is possible but not yet a given. It also was a meeting which might have brought back the desire for a relic from the past: a summer ECB meeting without a press briefing.”