ECB preview: Draghi to reinforce dovish message – RBS

By FXStreet FXStreet (Bali) – Brian Daingerfield, FX Trading Strategist at RBS, shares the bank’s view ahead of the ECB policy meeting, expecting President Mario Draghi to revise down 2017 inflation forecasts, while reinforcing a chiefly dovish message in his press conference.

Key Quotes

“The ECB holds its September policy meeting tomorrow and is also due to update its forecasts for both inflation and growth.”

“With inflation expectations lower and policy makers, including chief economist Praet, discussing renewed downside risks to inflation, we see the risks favouring the ECB revising down their 2017 inflation forecasts.”

“With that revision, which may place the ECB’s forecasts for headline inflation too far from the ECB’s target of returning inflation to “below but close to 2.0%,” we think the press conference will likely reinforce a chiefly dovish message, with some risk that the ECB gives a more clear signal that it is considering adjustments to its current program aimed at providing additional accommodation.”

“Of course, merely repeating the threat that the ECB stands ready to adjust its monetary policy stance without making new references to low inflation expectations, a stronger EUR, or lower inflation forecasts may not be enough to merit a repricing of expectations in the market.”
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Source:: FX Street