In reaction to the European Central Bank meeting today, Tim Graf, head of macro strategy for Europe at State Street Global Markets and Antoine Lesné, EMEA head of ETF strategy at SPDR ETFs, part of State Street Global Advisors, offer their views.
Graf commented, “Today’s extension of the ECB’s quantitative easing comes as no surprise, nor does the fairly dovish rhetoric around the risks to European price stability. Last weekend’s Italian referendum result was a timely reminder that political tensions within the Eurozone remain acute and threaten the upbeat tone to recent European data and the stability of the financial sector. The euro looks likely to test recent lows once more.”
Lesné commented, “As announced at the September meeting, the Governing Council of the ECB ‘had tasked the various committees to evaluate options that ensure a smooth implementation of our purchase program. Along with the 2019 inflation expectations these were both key determinant elements in the decision of the ECB to extend the programme end date for a second time. While expected by the market, the final approach towards an inevitable tapering was acutely awaited. Reducing purchases gradually or more abruptly had been floated ahead of the meeting. Given the result of the Italian referendum over the weekend, an aggressive tapering would have been misplaced as political uncertainty continues to plague the Eurozone. Expect the EUR to continue on its weakening trend.”
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Article Published: 08/12/2016