Maybe "What would Draghi do?" will become a catch phrase when he resigns, but for now its "What will Draghi do?"
The European Central Bank meet Thursday.
On balance, expectations are the Governing
Council will keep policy on hold
- market pricing is 35% for a cut (actually a touch higher than 35), so its not negligible by any mean
And the GC will provide a strong signal for
further easing ahead, soon (the September meeting would be the next opportunity).
A dovish Draghi is no secret, EUR has been on the slide reflecting this. The dovishness will continue right into his final meeting this year and likely with new Prez Lagarde in 2020.
I am very much looking forward to seeing how Lagarde handles the role. She is a savvy operator and I expect her to have the EU wrapped around her finger within months of assuming the top job. She'll want, and I reckon will get, a fiscal boost in Europe, which should lower dependence on monetary policy to do the heavy lifting.