Market consensus on ECB doesn't add-up - BTMU

BTMU said the ECB doesn't want total clarity

BTMU FX Strategy Research doesn't agree with the market consensus on the ECB monetary policy decision on Thursday which has quickly come around to this "lower for longer" type plan, expecting a cut from EUR 60bn to EUR 30bn from January with QE extended through to September.

"We have two problems with the market consensus that in our view doesn't quite add up.

Firstly, every ECB official that has spoken on the subject of tapering has emphasised the importance of flexibility. By laying out a plan like the market expects is not exactly creating flexibility and would also strengthen market expectations that QE will end in September 2018.

Secondly, it would merely reinforce the belief in the market of the ECB reaching an asset purchase constraint that it has no appetite to tinker with. Both these factors would act against trying to strengthen forward guidance and pushing rate expectations further into the future," BTMU argues.

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