Daily Insight
Group Economics Macro & Financial Markets Research
03 November 2015
Is the ECB changing its message?
ECB President Draghi sounds more cautious…
Nick Kounis
…but we still think further monetary easing is on the cards
Head Macro & Financial Markets
Global manufacturing PMI firms in October, though growth moderate…
…helped by turn in China’s Caixin index, and modest improvement in
Research Tel: +31 20 343 5616 nick.kounis@nl.abnamro.com
US and eurozone
Arjen van Dijkhuizen Senior Economist Tel: +31 20 628 8052
Draghi tones down rhetoric…
arjen.van.dijkhuizen @nl.abnamro.com
Over the weekend, ECB President Mario Draghi seemed to tone down his dovish rhetoric somewhat compared to the October press conference, in comments he made to Italian newspaper Il Sole 24. His remarks in general gave the impression that further stimulus is not a done deal, which provided some support to the euro and weighed on eurozone government bonds. Mr Draghi said that the central bank would take action ‘If we are convinced that our medium-term inflation target is at risk’ and ‘we will see whether a further stimulus is necessary’. He also noted that it was ‘too early’ to pass judgment on lowering the deposit rate further. …but easing still likely With the euro having settled around the 1.10 mark against the dollar, and markets having gone a long way to price in additional stimulus, the ECB President may have been concerned that expectations would run too far ahead. This would make it difficult to match or even surpass these expectations when the Governing Council meets next month. So Mr Draghi may have been trying to rein in the speculation on the degree of extra stimulus rather than signalling that the ECB will sit on its hands. Indeed, we still think further monetary easing next month is likely given the ongoing downside risks to inflation the ECB identified at its September and October meetings. We expect an increase and extension of QE as well as a 10bp deposit rate cut. Global manufacturing PMI firms Global manufacturing seems to be finding its footing. The manufacturing PMI rose to 51.4 in October from 50.7 in September. Although it remains at low levels consistent with only moderate growth, the outcome is the best since March (when it was 51.7) and provides the first tentative sign that growth momentum may be stabilising. The most noticeable
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