Global Macro Service > Research Briefings > Eurozone

Draghi’s dovishness makes up for dropping easing bias

The ECB has taken a very cautious first step on its long road towards normality. Removing the QE easing bias from its communication keeps the central bank on-track to end its net asset purchases some time later this year pleasing the hawkish camp. Further changes to the communication like a strengthening of the forward guidance on interest rates are likely to follow in June.

However, that hawkish baby-step was accompanied by a barrage of dovishness from Mario Draghi that is meant to prevent financial markets from a premature tightening of monetary conditions. Yet, the ECB president’s rhetoric was also a stark reminder that significant uncertainties remain regarding the inflation outlook that could yet derail or delay further normalisation steps. We expect the ECB to retain a very cautious and incremental approach to policy normalisation.

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