All eyes on ECB’s QE – UOB

FX Strategists at UOB Group gave their views on the upcoming ECB meeting (Thursday).

Key Quotes

“Expectations of ECB tapering appear to be the main factor supporting the EUR for now. Although an interest rate increase is certainly not expected from the central bank this Thursday (26 October), we are expecting an announcement of tapering plans of its asset-purchase program (APP) in the form of slowing its asset purchases gradually (which is currently at a pace of EUR60bn per month) in January 2018 after the current program expires in December 2017”.

“The key questions remain as to the specific magnitude of that reduction as well as the planned duration of the asset purchase program, with the option between a slower pace of buying for a longer horizon, or a shorter period of higher purchases”.

“Overall, we still expect the ECB to maintain a considerable degree of monetary accommodation for inflation dynamics to become durable and self-sustaining”.