Nomura says the European Central Bank was very dovish! (Stop me if you've heard this already :-D)
- ECB confirmed that the degree of monetary policy accommodation needs to be "re-examined" at the 3 December meeting
- Downside risks to growth and inflation remain
- Signals that action would come at the next meeting were stronger than we expected
Nomura are changing their ECB call
- Bringing forward our expectation of when the ECB will announce a change in the monetary policy stance to 3 December (from 10 March, at the latest)
More:
- Further deposit rate cuts were confirmed as still being possible
- Reigniting and elevating the threat of a deposit rate cut makes sense in terms of signalling that the Council is far from being out of "ammunition"
- Draghi confirmed no specific choice has been made yet on which monetary policy instrument(s) might be used
- Nomura continue to expect the ECB to extend QE by at least six months to "end March 2017, or beyond" (adding €360bn of stimulus), with a greater risk now of a longer extension to June 2017 (which would add €540bn of stimulus) given the continued sluggishness of the inflation recovery
Mr Draghi managed to over-deliver again
- Effectively preannouncing further monetary policy easing for the December meeting and explicitly putting rate cuts as a monetary policy tool back on the table
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What Nomura is saying is pretty much what the market is thinking ... nothing much new here really.
