ECB Preview: Council in wait-and-see mode - ABN AMRO

"The ECB meets later this week. The communication following the meeting will be watched for any changes in language and for the update of the staff projections," notes Aline Schuiling, ABN AMRO senior economist. 

Key quotes

"Overall, we think the ECB is in wait-and-see mode and it will attempt to avoid a shift in monetary policy expectations following the communication."

"We judge that the ECB’s forward guidance will remain unchanged. There is little reason for any change in the guidance on QE (after September… the monthly pace of the net asset purchases will be reduced to €15 billion until the end of December 2018 and net purchases will then end) or interest rates (to remain at their present levels at least through the summer of 2019). This guidance was update only in June."

"The guidance on reinvestment policy (as long as necessary) has not been updated, but the ECB does not seem in any hurry to be more specific in this area. Eventually we would expect the central bank to specify that reinvestments will continue ‘well past the period of unchanged rates’. This would be consistent with the exit timeline of the Fed."