ECB: Still dovish, but fixed income investors should be ready for a new phase
What are your views on ECB policy going forward?
Andrea Brasili: The ECB council behaved pretty much in line with the previous meeting (including what emerged from the minutes as a sort of post-dated message). The council removed the easing bias on the Asset Purchase Programme (i.e. the reference to the possibility of upscaling the APP if necessary), but President Draghi was dovish in commenting the change, saying that this was a sort of backward looking measure, acknowledging the decline in inflation variance. Then, it is interesting to note the reiteration of a growing confidence on the domestic economy, with some downward risks (also increasing) coming from the global economy (this time from the West, not the East), explicitly mentioning the need to monitor FX and financial conditions and developments. There was a marginal upward revision of growth forecasts, while there was a (marginal) downward revision of inflation forecasts that, however, does not change the general picture. We think that the ECB will maintain this approach of sending small progressive messages, hence in the minutes (due on April, 12), we will become aware of what the discussion at the next meeting (on April, 26) will focus on.