ECB Oct'19 Meeting Preview - Draghi, one last time!

European Central Bank (ECB) head, Mario Draghi is all set to deliver this last press conference later this evening. The expectations from the meeting is understandably low given the re-start of QE and rate cuts undertaken last month.

We do not expect the meeting and press conference to generate new insight on the monetary policy outlook. With last month's decision, the direction has been set and the recent data, while very weak, was not bad enough to trigger further dovish monetary policy tweaks. The economy remains weak and yesterday's reading on consumer confidence was the weakest since January 2018. Manufacturing is struggling and governments continue to refuse to provide stimulus.

ECB, can however announce the details of the new APP (Asset Purchase Plan) implementation at the meeting, with no change to policy or forward guidance. We expect a dovish lean, given concern about inflation expectations and softer growth trends

Draghi could also pick up on his previous press conference's theme in which he emphasized the need for fiscal policy to take over. The focus will likely be on lessons learned during his 8-year tenure and the recent debate among former central bankers and CEOs of financial companies regarding the increased risks to financial stability

The next tactical reassessment will be due on 12 December, under the leadership of new ECB chief, Christine Lagarde and based on new ECB macro forecasts. Expect muted reaction to euro with both upside and downside capped.


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