In past Comments we explained that we should expect little in the way of clues on monetary policy from ECB President Lagarde. It turns out it’s her style not guide markets in the way of her predecessor, Mario Draghi. Furthermore, the launch of the ‘strategic review’ this week means that the ECB will be more preoccupied with existential questions than with tinkering with policy in the short term. Thus, we expect the ECB not to change policy this year except that it will end QE somewhere in the second half of the year. The ECB hopes that exiting QE would set the stage for a hike soon thereafter, namely at the start of 2020. That is, if you take the ECB’s forward guidance at face value. We haven’t made up our mind about ECB policy in 2020, so we will reserve judgement on that. For now, at least.


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