What are the main messages coming from October ECB’s conference?
Andrea Brasili: The Asset Purchasing Programme (APP) will continue at €60 bln per month until December and then the size of purchases will be reduced to €30 bln per month starting from January, until September 2018. In its statement, the European Central Bank (ECB) once again expressed that the programme could go “…beyond if necessary” - indicating that the Council stands ready to increase the APP in terms of either size or duration, if needed (hence the program remains open-ended). In the press conference, President Draghi also stated that the ECB would not end the programme abruptly so there will likely be a phase-out period. Regarding forward guidance on rates, the ECB will remain at its present levels for an extended period of time, and well past the horizon of the net asset purchases.
Finally, speaking about its reinvestment policy, the ECB clarified that reinvestments will continue for an extended period of time (after the end of its APP). Even though there was probably an intense debate regarding the size of purchases/ the duration of the programme/its open-end nature, the ECB sent a dovish message and maintained quite a high degree of accommodation. The assessment given on the economy highlights that the recovery is getting stronger and more broad based (increasingly stronger corporate profits and hence investments) and its pace seems unabated in H2.