Barclays have a detailed note on the European Central Bank and Draghi

In brief (bolding mine):

  • At the October 2017 meeting, the ECB extended its APP programme for a further nine months (until Sep 2018) at a reduced monthly pace of net purchases of EUR30bn with no other changes to interest rates or to forward guidance, as we had expected. After today's press conference, we maintain our scenario of another extension of QE after September 2018, at least until the end of 2018, and a change in the sequencing between QE and the depo rate hikes in spring 2018, which would open the door for an increase in the depo rate of 20bp in Q4 18.

The note goes on, the main points:

  • Economic conditions continue to improve
  • but medium-term outlook for inflation still falls short
  • & spare capacity continues to weigh on wage dynamics
  • we think that continued monetary accommodation decided today remains appropriate through 2018.

QE extended and remains open-ended:

  • as we expected
  • Draghi argued that there is a large amount of uncertainty, so it is prudent to keep options open beyond September 2018 ... during Q&A, Draghi hinted that ending QE at once after September was unlikely
  • supports our view that QE was likely to continue after September 2018, though at an even slower pace. We also think that for the time being, given the strength of the euro, the ECB will retain its language on interest rates policy and forward guidance throughout 2017 and for the first months of 2018.

Re-investments of maturing securities:

  • previously communicated by ECB officials
  • but it is newly introduced in the formal statement
  • now becomes part of the formal forward guidance
  • we believe that the GC will likely focus more and more on the stock of assets to argue that monetary policy remains very accommodative

Interest rates and sequencing:

  • we still expect a change in the ECB forward guidance in Q2 18, paving the way for depo rate to be raised by 20bp in Q4 18
  • This does not mean that it will be the beginning of a new rate hiking cycle (as rates will remain low for long); instead, we believe it would be the beginning of normalisation of the extraordinary policy of negative rates

Composition and reinvestments:

  • Draghi ... announced that there will be a press release later addressing details of how the APP will evolve, as well as on the APP composition and reinvestment
  • We have estimated that the average reinvestments per month amount to c. EUR15bn in 2018

The decision was not unanimous:

  • Overall, there was not much disagreement
  • as time goes by and the economy continues to grow well above trend, more hawkish views are likely to emerge publicly, therefore contributing to a reopening of the debate on sequencing next spring

Non Performing Loans:

  • In our view, the ECB is likely to toughen its stance on banks' NPLs in order to enhance the transmission of monetary policy while the ECB will remain dovish on its monetary policy accommodation in order to bring inflation back to target.

More transparency on the QE programme:

  • From now on, the Governing Council has decided to publish a monthly report
  • On the expected monthly redemption amounts for the asset purchase programme (APP) over a rolling 12-month horizon
  • It has also decided to provide additional details on the implementation of the programme