The ECB’s official policy decision signals the ECB’s first baby step towards tapering.
In its regular 1.45pm CET statement, the ECB just gave a sneak preview of how the first baby step towards tapering could look like when ECB President Draghi speaks to the press at 2.30pm CET. It has become a new communication tool for the ECB to accompany its rate announcement with forward guidance and some details on QE. Today, this forward guidance was changed.
It was not about what the ECB said but what it didn’t say. In fact, the ECB omitted the reference that interest rates could be lower than their present levels. This easing bias is now gone. Starting at 2.30pm CET, Draghi will present the new ECB staff macro-economic projections, the ECB’s assessment on growth and inflation and possibly some hints at the future path of monetary policy. In our view, some tweaks to the macro-economic risk assessment as a clear statement that the current recovery does still not show any inflationary signs are the most likely outcomes of the press conference.