European Central Bank meeting today

  • 1145GMT will be the European Central Bank policy announcement
  • 1230GMT for the following press conference by President Draghi

I posted previews a little earlier:

More from the banks now, this via ...

Bank of America / Merrill Lynch:

Normally, the ECB would not be under any kind of pressure for its Governing Council meeting

  • They moved enough in March, by removing the easing bias on QE, to take a breather on their "gradual adjustment" in their communication.
  • The April meeting was expected to be a mere formality before the more strategic rendezvous in June.
  • We still think it will be the case and we expect no fireworks on ... Thursday. But the data flow has turned disappointing and harder to read.

Relative to January, forward rates suggest the market expects a slower pace of normalisation next year.

  • Investors will want to hear Draghi's take on the macro picture.
  • Our view is the ECB is unlikely to change its tune significantly .... We expect on balance a message of confidence.
  • At the same time, beyond what Draghi will actually say .... if the news flow does not correct fast, internally the ECB may well want more time to gauge the situation.
  • Our baseline remains that the changes to forward guidance will come in June, but we see a higher risk that this is pushed to July.
  • When the going gets tougher, central banks at least initially prefer to sound more confident than they really are. At a time when both hard and soft data are edging down and trade war rhetoric remains prominent, on balance it probably makes more sense for the Governing Council to try to reassure markets by sticking to the current view of "confidence in the convergence" of inflation towards the ECB's target.
  • In practice, the ECB would acknowledge the moderation in the recent data flow in its discussion of the economic outlook, while stating that the baseline presented in the March forecasts remains valid.

We would also expect the ECB to acknowledge that aggregate core inflation remains disappointing, but that more sophisticated measures of inflationary pressure are going in the right direction.

Deutsche:

Our European team's thoughts ... In summary, they expect the "dovish exit" strategy to remain intact at the next ECB press conference.

  • First, they expect the ECB to retain its confidence in above-trend growth despite the recent loss of momentum.
  • Second, they expect the optimism - which increasingly extends to inflation - to remain conditional on the ECB being patient, persistent and prudent with stimulus.
  • Third, because of risks, they expect the ECB to signal ample monetary stimulus after QE ends.

Around a core unchanged message, the risk is Draghi errs on the side of caution and the timing of the announcement of the end of QE slips from June to July, as suggested by Friday's Bloomberg story.