{"id":128792,"date":"2020-12-08T19:21:00","date_gmt":"2020-12-08T16:21:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/the-ecb-has-a-crucial-decision-to-make-heres-what-analysts-expect\/"},"modified":"2020-12-08T19:21:00","modified_gmt":"2020-12-08T16:21:00","slug":"the-ecb-has-a-crucial-decision-to-make-heres-what-analysts-expect","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/the-ecb-has-a-crucial-decision-to-make-heres-what-analysts-expect\/","title":{"rendered":"#\n  The ECB has a crucial decision to make \u2014 here\u2019s what analysts expect"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3fa842ce74a\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3fa842ce74a\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/the-ecb-has-a-crucial-decision-to-make-heres-what-analysts-expect\/#Steve_Goldstein\" >Steve Goldstein<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  The ECB has a crucial decision to make \u2014 here\u2019s what analysts expect<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\">\n<\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000092630\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       European Central Bank President Christine Lagarde, and key officials including chief economist Philip Lane, have made clear they are about to take action to boost the eurozone economy that has been thwarted by a new wave of government restrictions.<\/p>\n<p> So the only debate heading into Thursday\u2019s meeting is what, not if, action will be taken.<\/p>\n<div class=\"paywall\">\n<p>Here\u2019s a look at what some leading observers are saying ahead of the meeting. The ECB decision will be announced at 1:45 p.m. local time, which is 7:45 a.m. Eastern, and the Lagarde press conference will start 45 minutes later. The consensus expectation is that the ECB will increase the size of the Pandemic Emergency Purchase Programme by \u20ac500 billion ($606 billion), and extend its expiration by six months, until December 2021.<\/p>\n<table>\n<tbody>\n<tr class=\"data odd\">\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      Firm<\/p>\n<\/td>\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      Comment<\/p>\n<\/td>\n<\/tr>\n<tr class=\"data even\">\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      ANZ<\/p>\n<\/td>\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      If the ECB decides to maintain a cushion and extend the program for 12 months, an increase in the PEPP package of EUR650bn to around EUR2trn is plausible. A six-month extension could warrant an increase in the facility of EUR350bn. We are leaning towards a 12-month extension, while the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>n market expectation is for an increase in purchases of EUR500bn. Of course, the outcome will depend entirely on the ECB\u2019s recalibration of what is needed to achieve its inflation mandate. Updated macroeconomic projections will also be published. We forecast 2021 inflation will rise by 0.7% vs the ECB\u2019s current 1.0% projection. <\/p>\n<\/td>\n<\/tr>\n<tr class=\"data odd\">\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      Evercore ISI<\/p>\n<\/td>\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      With much already discounted in markets, we fear that the ECB may struggle durably to contain euro strength even with the longer PEPP extension that would imply a slowing in the pace of QE [quantitative easing] over time. This puts the spotlight also on the tone the ECB strikes on possible future depo rate cuts and the possibility (not likely but worth considering) of new rate guidance.<\/p>\n<\/td>\n<\/tr>\n<tr class=\"data even\">\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      Goldman Sachs<\/p>\n<\/td>\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      Our economists expect an increase of the PEPP envelope by \u20ac400bn, with net purchases continuing until the end of 2021, as well as additional TLTROs [targeted longer-term refinancing operations], with an extension of the preferential rate period to December 2021. With the market also priced for a PEPP increase of a similar magnitude, we think that the hurdle for ECB-over-delivery is high. <\/p>\n<\/td>\n<\/tr>\n<tr class=\"data odd\">\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      ING<\/p>\n<\/td>\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      The aim of all ECB measures will be to extend the current very accommodative monetary stance, rather than increasing it. This current crisis is a crisis in which fiscal policy, not monetary policy, can make the difference for the economy. Therefore, while still vague enough to keep the door open, Christine Lagarde will try to signal that this new round of monetary action will really be the last one.<\/p>\n<\/td>\n<\/tr>\n<tr class=\"data even\">\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      Jefferies<\/p>\n<\/td>\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      By the end of the year the ECB is on course to expand its balance sheet by close to 50% on where it was at the end of 2019 (by ~\u20ac2.3trn, just under 20% of euro area nominal GDP in 2019), split almost equally between additional QE and liquidity injected through the TLTROs. The ECB\u2019s aims for 2021 are likely to be more modest, with the main objective being to preserve the favorable financing conditions achieved this year. In terms of policy, this means extending the favorable TLTRO terms by 12-24 months. At the moment, the -1% rate that the banks can get on their loans from the ECB (if they hit lending targets) is only in place until 23 June 2021, and this is likely to be extended, perhaps to the end of 2022. <\/p>\n<\/td>\n<\/tr>\n<tr class=\"data odd\">\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      Morgan Stanley<\/p>\n<\/td>\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      We expect further easing, concentrated on the two key pandemic tools of PEPP (flexible asset purchases) and TLTRO (cheap bank funding) to ensure that easy financing conditions are maintained while the economic impact of the crisis continues, i.e., for another year until shortly before the ECB expects output to return to pre-pandemic levels (2H22). We expect PEPP and TLTRO to be extended to June 2022, and up our PEPP top-up estimate from \u20ac500 billion to \u20ac600 billion, so buying can continue around the current pace of \u20ac16 billion\/week. Also, we expect full reinvestment to be pushed back with the forecast to end-2023. We remain skeptical on a rate cut, given recent guidance, concerns about the side effects and the TLTRO bonus option as an alternative.<\/p>\n<\/td>\n<\/tr>\n<tr class=\"data even\">\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      Nomura<\/p>\n<\/td>\n<td align=\"\" valign=\"top\" colspan=\"1\">\n      The ECB is set to deliver a package of monetary policy easing measures but will it include a rate cut? Consensus says no, and while lower rates have not been a feature of ECB policy maker comments over the past month, we think a 10bp cut to the depo rate could be helpful as one of a range of measures. <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Steve Goldstein\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Steve_Goldstein\"><\/span>Steve Goldstein<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener noreferrer\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B21005575-02D4-D4B5-4572-D169D6829542%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener noreferrer\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# The ECB has a crucial decision to make \u2014 here\u2019s what analysts expect &#8221; European Central Bank President Christine Lagarde, and key officials including chief economist Philip Lane, have made clear they are about to take action to boost the eurozone economy that has been thwarted by a new wave of government restrictions. So&#8230;<\/p>\n","protected":false},"author":1,"featured_media":128793,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-128792","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/128792","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=128792"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/128792\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/128793"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=128792"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=128792"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=128792"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}