Does Draghi Have One More Treat Up His Sleeve?

 | Dec 14, 2017 07:33

  • ECB, BoE and SNB Headline Packed Session;
  • Traders Seeking Insight on Post-QE Policy From Draghi;
  • No Shortage of Data Despite Central Bank Dominance.
  • ECB, BoE and SNB Headline Packed Session

    • We have a jam packed session in store on Thursday as we get monetary policy decisions from three major central banks, as well as a host of important economic releases from across Europe and the US.

    The European Central Bank, Bank of England and Swiss National Bank will all conclude their meetings today, with none of them seen following their US counterparts and squeezing in one more change before year-end. Of the three, the ECB announcement will probably be of most interest as the central bank is now actively trimming its stimulus program and President Mario Draghi will deliver the latest macro-economic projections.

    Traders Seeking Insight on Post-QE Policy From Draghi

    With the ECB having only announced a taper to its quantitative easing program at the last meeting, it’s extremely unlikely that further updates will come today and I doubt Draghi will make any promises regarding the end of bond buying from September. That said, with the economic recovery gathering momentum, Draghi is likely to be pushed on this and may offer small clues on the next steps, for example the timing of the first rate hike and how the central bank will approach raising rates and reducing its balance sheet. I don’t think we should expect too much though as Draghi detests being perceived to have committed to anything.

    The BoE announcement should be a quieter affair, with the central bank not following up its meeting with a press conference. We will get minutes from the meeting as well as voting information, however with the central bank having only raised interest rates for the first time since the financial crisis last month, I doubt there’ll be much in these that will cause much of a stir. I still question whether the rate hike was inflation related or a move to get the rate back to what the BoE previously considered to be the lower bound, something that may become clearer as we see how much appetite there is for more rate hikes over the next year.