{"id":17675,"date":"2018-06-14T11:52:45","date_gmt":"2018-06-14T08:52:45","guid":{"rendered":"https:\/\/bestinsurance.gr\/a1\/?p=17675"},"modified":"2018-06-14T11:52:45","modified_gmt":"2018-06-14T08:52:45","slug":"june-or-july-ecb-debates-bond-plans-future-decision-day-guide","status":"publish","type":"post","link":"https:\/\/bestinsurance.gr\/a1\/archives\/17675","title":{"rendered":"June or July? ECB Debates Bond Plan&#8217;s Future: Decision Day Guide"},"content":{"rendered":"<ul>\n<li>ECB may announce QE exit plan after council meeting in Riga<\/li>\n<li>Updated growth, inflation projections to inform discussion<\/li>\n<\/ul>\n<p>By\u00a0Carolynn Look<\/p>\n<p>(Bloomberg) &#8212;<\/p>\n<p>Mario Draghi\u00a0and his\u00a0European Central Bank\u00a0colleagues will hold their first formal talks on Thursday on when to end their asset purchase program, though it\u2019s less clear whether they\u2019ll make a decision or wait until July.<\/p>\n<p>Three years into the ECB president\u2019s bond-buying program, investors and economists are bracing for a signal on when it\u2019ll be phased out. Expectations are split as to whether officials are ready to set a timetable now, or if they\u2019ll hold off for another six weeks.<\/p>\n<p>Follow the ECB rates decision and briefing in our TOPLive blog here.<\/p>\n<p>In favor of June is the ECB\u2019s increased confidence in the inflation outlook that may be cemented by updated projections. An extension of quantitative easing until the end of the year is widely anticipated by investors, with expectations for the first interest-rate increase well anchored somewhere in the middle of next year.<\/p>\n<p>Pushing a decision to July would provide policy makers with six weeks more data that might help them better judge the extent of the recent economic slowdown, as well as risks from Italy\u2019s crisis and a mounting trade dispute. With asset purchases currently scheduled to run through September, officials are in no rush, and waiting would give them more time and flexibility to prepare for a stimulus mix that doesn\u2019t include bond buying.<\/p>\n<table>\n<tbody>\n<tr>\n<td><strong>What Our Economists Say<\/strong><\/p>\n<p>\u201cOn balance, and in light of ECB Chief Economist Peter Praet\u2019s\u00a0comments\u00a0on June 6, it seems likely that the ECB will declare victory on inflation and signal the end of asset purchases. But it will do so cautiously.\u201d<br \/>\n&#8212;\u00a0Jamie Murray, Bloomberg Economics. For the full report, click\u00a0here<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Here\u2019s what Draghi may talk about at 3:30 p.m. in Riga, following one of the Governing Council\u2019s occasional out-of-Frankfurt meetings.<\/p>\n<p><strong>Ending Asset Purchases<\/strong><\/p>\n<p>Economists largely agree that the ECB\u2019s 2.6 trillion-euro ($3.1 trillion) bond-buying program will come to a full stop at the end of December after a step-by-step reduction. Such a plan could be announced in the central bank\u2019s policy statement at 1:45 p.m. in Frankfurt, or Draghi could decide to drop a more subtle hint if officials balk at outlining a definite plan.<\/p>\n<p>Communicating an end to quantitative easing would mark a first step toward relinquishing some of the ECB\u2019s unconventional policy tools, which also include negative interest rates.<\/p>\n<p>The Federal Reserve, which stopped adding to asset purchases in 2014 and started raising rates in late 2015, is further ahead on its exit path. Central bankers tightened borrowing costs for a second time this year on Wednesday. The Bank of Japan is set to stay on its stimulus course when it sets policy on Friday.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-17676\" src=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/1-1.png\" alt=\"\" width=\"895\" height=\"523\" srcset=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/1-1.png 895w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/1-1-300x175.png 300w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/1-1-260x152.png 260w\" sizes=\"auto, (max-width: 895px) 100vw, 895px\" \/><\/p>\n<p><strong>Confidence in Inflation<\/strong><\/p>\n<p>When he addresses reporters, Draghi will likely repeat some of his colleagues\u2019 recent praise of the economy.<\/p>\n<p>Executive Board member\u00a0Benoit Coeure\u00a0described growth in the 19-nation region as \u201cstrong and broad-based,\u201d and\u00a0Klaas Knot, who heads the Dutch central bank, said the inflation outlook has become\u00a0less dependent\u00a0on monetary stimulus.<\/p>\n<p>Chief economist\u00a0Peter Praet, who crafts the policy proposals, pointed to evidence last week that wages in the region are finally picking up while acknowledging waning market expectations for a significant expansion of bond buying. He signaled that policy makers will hold their first full talks on unwinding stimulus, confirming an earlier Bloomberg News\u00a0report.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-17677\" src=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/2-1.png\" alt=\"\" width=\"861\" height=\"496\" srcset=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/2-1.png 861w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/2-1-300x173.png 300w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/2-1-260x150.png 260w\" sizes=\"auto, (max-width: 861px) 100vw, 861px\" \/><\/p>\n<p><strong>Signs of Economic Slowdown<\/strong><\/p>\n<p>Even so, in their deliberations, policy makers will have to assess a\u00a0spate of downbeat economic data, which they\u2019ve so far shrugged off. Industrial production was the latest indicator to disappoint expectations on Wednesday, after business and investor confidence slumped and a gauge for euro-area manufacturing fell to the lowest level in 15 months.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-17678\" src=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/3-2.png\" alt=\"\" width=\"863\" height=\"542\" srcset=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/3-2.png 863w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/3-2-300x188.png 300w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/3-2-260x163.png 260w\" sizes=\"auto, (max-width: 863px) 100vw, 863px\" \/><\/p>\n<p><strong>Highlighting Accommodative Stance<\/strong><\/p>\n<p>As officials give up net asset purchases as stimulus tool, they\u2019ll stress other measures that will keep their policy stance accommodative, such as the stock of debt bought under QE, reinvestments of maturing bonds and low borrowing costs.<\/p>\n<p>A detail to look out for is the ECB\u2019s language on interest rates, which officials expect to\u00a0strengthen\u00a0with time.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-17679\" src=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/4-1.png\" alt=\"\" width=\"913\" height=\"512\" srcset=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/4-1.png 913w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/4-1-300x168.png 300w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/4-1-260x146.png 260w\" sizes=\"auto, (max-width: 913px) 100vw, 913px\" \/><\/p>\n<p><strong>Global Risks<\/strong><\/p>\n<p>On top of questions related to future monetary policy, Draghi will face inquiries into a host of geopolitical risks that could still cause momentum to derail.<\/p>\n<p>A trade spat with the U.S. is already weighing on the outlook and threatening to intensify. Within the region, Italian bonds have come under pressure after the nation\u2019s populist government raised doubt over its commitment to euro-area membership and European Union spending rules.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-17680\" src=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/5-1.png\" alt=\"\" width=\"940\" height=\"550\" srcset=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/5-1.png 940w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/5-1-300x176.png 300w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2018\/06\/5-1-260x152.png 260w\" sizes=\"auto, (max-width: 940px) 100vw, 940px\" \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>ECB may announce QE exit plan after council meeting in Riga Updated growth, inflation projections to inform discussion By\u00a0Carolynn Look (Bloomberg) &#8212; Mario Draghi\u00a0and his\u00a0European Central Bank\u00a0colleagues will hold their first formal talks on Thursday on when to end their asset purchase program, though it\u2019s less clear whether they\u2019ll make a decision or wait until<\/p>\n","protected":false},"author":1,"featured_media":15834,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-17675","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-1"],"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/17675","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/comments?post=17675"}],"version-history":[{"count":1,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/17675\/revisions"}],"predecessor-version":[{"id":17681,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/17675\/revisions\/17681"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media\/15834"}],"wp:attachment":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media?parent=17675"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/categories?post=17675"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/tags?post=17675"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}