On Thursday, June 2, 2016, the ECB held another press conference. Here are the key points to remember:
– As expected by the markets, the institution did not change its rates or announce any new measures.
– In absolute terms, the effects of current measures (QE) or those announced previously (corporate bond purchases, new TLTROs) are expected to be seen before any new decisions are made.
– The institution’s inflation forecasts remain virtually unchanged from last month: they remain at 1.3% and 1.6% for 2017 and 2018 respectively, down from -0.2% and -0.1% for 2016 (HICP).
– Corporate bond purchases will begin on June 8, and the first series of new TLTROs (four-year loans to banks at very low rates) will begin on June 22.
Draghi spoke in a non-alarmist tone during the session, adopting a « wait and see » attitude. He said he currently sees no evidence of second-round effects on wages and corporate pricing behavior. The presence of such effects would be very dangerous for the institution (see our insight « Understanding deflation » on this subject). He placed great emphasis on the development of commodity prices (oil) and geopolitical risks, particularly the Brexit referendum. These factors are likely to weigh heavily on future decisions.
