ECB's Rehn: Central bank could strengthen forward guidance, cut rates, relaunch QE if needed

Author: Justin Low | Category: Central Banks

Comments by ECB governing council member, Olli Rehn

  • Central bank could also introduce mitigating measures from negative rates
  • ECB is determined to act in case of further weakening in economic activity
  • US-China trade war is unlikely to subside any time soon
In other words, their extension of the forward guidance last week is no guarantee that they're looking towards rate hikes and that's a similar message to what we heard from Draghi during his press conference as well.

As mentioned then, if economic data - especially inflation - continues to disappoint in the coming months, last week's ECB meeting will be increasingly seen as a pivotal shift from the central bank to leaning on the dovish side. Hence, should that be the case, they may very well hint at easing policies in the latter portion of 2H 2019 (after the new ECB president steps into office in replacement of Draghi).

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