ECB: Change of forward guidance to confirm stimulus is on the way - ABN AMRO

Nick Kounis, head of Financial Markets Research at ABN AMRO, noted that there is a possibility that the (ECB) Council will signal the increasing likelihood of a re-start of QE by adding a line to its forward guidance on its asset purchase programme.

Key quotes

"It will very likely change its forward guidance on interest rates from the current expectation that ‘the key ECB interest rates (will) remain at their present levels at least through…’ to ‘the key ECB interest rates (will) remain at their present levels or lower at least through…’."

"This would signal that a cut in policy rates is likely at the next Governing Council meeting in September."

"For instance, it could say that the ECB would ‘re-start net asset purchases if necessary to ensure sustained convergence of inflation to levels that are below, but close to, 2% over the medium term’."