“From a macro perspective, European economic data has remained resilient following the UK’s decision to leave the EU,” added Doyle. “Both growth and inflation have been in-line with ECB forecasts. Consequently, the ECB Governing Council probably feels that there is plenty of time to assess incoming economic data and the impact of its quantitative easing programme.”
The market reaction the announcement has been relatively limited as result of the lack of anything new of consequence, according to Alex Lydall, a trader at Foenix Partners.
“At first glance rhetoric from Mario Draghi appeared largely unchanged but a potential undertone was present as he specified he had tasked the ECB committee to evaluate stimulus options moving forward,” Lydall said. “Reading between the lines, this could potentially suggest a road is being paved to further action towards the end of this year, most likely regarding quantitative easing. Thus far, monetary policy measures have seen limited upside for the bloc state and it seems Draghi is well aware that action will be needed, it is just what and when. Deflation is still particularly worrying and he noted that the probability of this occurring again has unfortunately not decreased.”
