Barclays with a good note on European Central Bank head Draghi at Jackson Hole, but probably more helpfully a look ahead to the September ECB meeting (bolding mine)

As we had expected, the eagerly awaited speech by ECB President Mario Draghi at Jackson Hole did not contain any insight on upcoming monetary policy decisions and focused on long-term issues, in line with the theme of the symposium this year about how "to foster a dynamic global economy".

  • Less than two weeks before a very important meeting of the Governing Council, President Draghi remained very cautious at Jackson Hole and avoided talking about upcoming monetary policy decisions. His speech focused on the theme of the Symposium, about "how to foster a dynamic global economy", as we had expected.
  • Arguing that boosting productivity was the only way to strengthen potential output growth, which has dropped from 2% before the financial crisis to c.1% today in OECD countries, he focused on global solutions to accompany national structural policies and warned in particular against the risk stemming from the temptation of implementing protectionism and of unduly easing financial regulation, echoing some of Chair Yellen's comments earlier on the same day.
  • President Draghi acknowledged that concerns about free trade and economies' openness have been mounting over past years, due to the perception that its positive consequences could be outweighed by side effects, in particular the feeling that it could result in higher inequalities. "People are concerned about whether openness is fair, whether it is safe and whether it is equitable", he said in his address at Jackson Hole, and he attributed this to a lack of trust in foreign countries' willingness to enforce regulation. Therefore, he called on the strengthening of multilateral frameworks, such as the WTO, the G20, the FSB and the Basel Committee, to address this fear and avoid protectionist policies or social dumping, which would eventually be detrimental to growth and well being.
  • Unlike three years ago, when his speech at Jackson Hole was a major breakthrough and opened the door to unconventional policies to fight deflation risks, President Draghi avoided mentioning the role of monetary policies, and in particular did not give any insight on upcoming monetary policy decisions. In particular, he did not comment on the current upward trend in the EUR, and following his speech, the European currency reached a 2.5-year high vs the USD.

All eyes are now on the 7 September meeting, where the GC is expected to hold an in-depth discussion about the parameters of monetary policy.

  • We think a change in the Forward Guidance (FG) on asset purchases is likely, which would open the door to a time extension of QE beyond December but at a lower monthly pace, as well as possibly an inflexion of FG on rates, which would enable a small increase in the depo rate during 2018.
  • Obviously, the GC will have to also take stock of the EUR appreciation, which could, if maintained, delay the return of inflation towards its medium-term objective.
  • We think updated ECB macroeconomic projections will likely include a small downward revision to inflation, and possibly a small upward revision to GDP growth.

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Yeah, yeah, I know, its all about north Korea this morning in Asia ... but I gotta give Dr. D some love too!

Thanks Eamonn, love you too!

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Earlier:

  1. Japan govt warns North Korea missile headed toward northern Japan

  2. More on the North Korean missile launch
  3. US military says North Korea missile did not pose a threat to North America
  4. USD/JPY on session lows as yen buyers continue in wake of North Korean missile test
  5. Just past 8am in Tokyo - USD/JPY higher as liquidity returns