Lowest ECB forecasts on record but a steady start for Lagarde
As expected, Christine Lagarde
delivered a message that the Governing Council is fully committed to the existing mix of policies on
interest rates, forward guidance and QE. This made her first ECB Press Conference devoid of controversy
or surprise, and for the markets, brought an hour of Q&A that barely led to a collective raised eyebrow –
undoubtedly just as she would have scripted it.
There were, however, some inconsistencies in
presentation in our view. For example, the relatively more optimistic tone of the opening statement
didn’t match the ECB’s new macro forecasts which are toward the lower end of expectations in terms of
where growth and inflation are likely to end up over the coming years. So, for instance, back in
September the ECB was pencilling in core inflation at 1.2% in 2020 and 1.5% in 2021; now the 2020 figure
stands at 1.3%, but in 2021 core inflation is anticipated to rise to only 1.4%. In terms of the new 2022
forecasts, these too were very much on the cautious side, with GDP growth at just 1.4% and both headline
and core inflation both at 1.6%.
Interestingly, and this may not be something the ECB would
have necessarily intended to draw attention to, a core inflation forecast of 1.6% on a 3-year out horizon
is actually the lowest figure the ECB has ever published (although not to blow this out of proportion, in
terms of 3-year out forecasts, they have only been published since 2016). One interpretation is that this
low figure highlights the scale of the ECB’s challenge in getting inflation back to target. A more
generous take is that the ECB is being deliberately overcautious, which then gives it room to push its
growth and inflation forecasts higher next year.
Indeed, our own view is that the euro area
will outperform expectations in 2020. And if that happens, the ECB will be in a position to raise its
forecasts and remove its easing bias around mid-year. However, much is dependent on when the ECB
concludes a review of its policy framework.
Alle Rechte vorbehalten. Nutzung ausschließlich für den privaten Eigenbedarf.
Eine Weiterverwendung und Reproduktion über den persönlichen Gebrauch hinaus ist nicht gestattet.
Kursdaten: Powered by Interactive Data Managed Solutions (IDMS). IDMS und die Datenlieferanten übernehmen keine Gewähr für die Richtigkeit, Vollständigkeit und Aktualität der Inhalte des Informationssystems. Die Kursdaten werden je nach Vereinbarung mit den Börsen/Handelsplätzen in Realtime, 15 Min. verzögert oder End-of-Day dargestellt. Weitere Hinweise entnehmen Sie bitte unseren AGB (§4 Abs.7).