Its Friday! But, hey, you know me, ever conscientious and always looking ahead (at least 5 minutes, usually).
So, here’s what Citi are expecting from Mr. ECB (aka Dr, Dre, Dr. Draghi, Dr. Showmeagoodtime, Dr. Barreloflaughs) next week:
- Expect the ECB to leave interest rates unchanged next week
- See a further cut in the deposit rate as unlikely
BUT …
- They say the market is underestimating the possibility of QE
(I don’t know how they think this, there’s been talk of little else since Jackson Hole, but there ya go)
Citi look for a QE program from the ECB to be announced late Q4 2014 / start Q1 2015
At the press conference next Thursday Citi reckon Draghi will say:
- The ECB is “ready to adjust its monetary policy stance further”
- To further hint at QE
- And that it is “closely monitoring” the downside risks to inflation
- In doing so he is “building a platform for additional non-conventional measures” soon
On the staff forecasts, Citi expect:
- 2014 GDP to be cut to 0.8% from 1.1%
- An increase forecast for 2015 & 2016 GDP by 0.1bp to 1.6% and 2.0%
Inflation forecasts…
- See 2014 HICP mid-point lowered to 0.6% from 0.8%
- For 2015 cut by 0.1bp to 1.1%
- For 2016 to increase by 0.1bp to 1.5%
I did a Google search for “Draghi laughing” and found this – no kidding
