The situation in Italy will not change the ECB's message to the markets

25.10.2018 / 12:20

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It is not expected at the ECB's meeting today to hear more significant changes in their rhetoric, despite the risks that have risen again.

Today we expect the ECB's decision on interest rates and later their press conference. As for the conference itself, no different approach is expected in communication to market participants, and no different decision on interest rates is expected except to remain at the same levels. Regardless of the concerns that have come from Italy, Breccitt and the tightening policy of the financial conditions in the United States can spread their consequences to the Old Continent as well.

He is yet to confirm that the ECB will stop its quantitative program (LTRO / QE) by the end of this year. If the economic situation deteriorates from the current session to December 13 (when the next ECB meeting), the Central Bank will rather adjust its monetary policy to conditions rather than extend its QE program. Which will mean that they will refrain from further buying bonds and rethink their periodicity in which to raise interest rates in the future.

At today's meeting, the focus will be on assessing global risks and whether it will have a significant impact on the mood and rhetoric of the ECB. The biggest surprise would be if the ECB occupies a "dovish" position stating that the situation has changed from "generally balanced" to "changed to deterioration".

Another topic of the discussion will be the Italian budget. The ECB is expected to emphasize its clarification that it is not the ECB's job to engage in decision-making and to help governments individually. Brockit will of course be in the spotlight and whether the rise in US interest rates will negatively affect the Eurozone.

Photo Source: Pixabay

Information Source: CNBC

Trader Martin Nikolov

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The situation in Italy will not change the ECB's message to the markets

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